According to reports, Tesla investors this week found that Tesla has recently made a series of new changes, including disappointing quarterly deliveries, record monthly production, And now that multiple factories will be shut down for several weeks.
Last month, media reports said that Tesla will stop most of the production of the Model Y production line in Shanghai in the first two weeks of July, and then stop the Model 3 production line for 20 days starting on July 18. Plant upgrades to boost production of the two models are expected to be completed in early August, the sources said.
On Monday, German media TeslaMag reported that Tesla’s factory near Berlin will be closed for two weeks starting July 11. Tesla aims to roughly double the plant’s production capacity starting in August, according to the sources. Last month, the Tesla factory produced 1,000 Model Ys for at least a week.
Tesla made no mention of those plans in its July 2 production and delivery announcement. Tesla said in its announcement that it produced a record number of vehicles in June, but delivered 254,695 vehicles in the quarter, missing analysts expectations.
Jefferies analyst Philippe Houchois has a “buy” rating on Tesla stock. The “relative weakness” in the quarter was in line with expectations, he said in a July 3 research note. He said Tesla CEO Elon Musk called the new factory a “capital melting pot” as a sign that Tesla’s free cash flow may have been severely impacted by the disruption to working capital.
The biggest impact on Tesla’s performance last quarter came from the shutdown of the Shanghai plant due to the epidemic. However, Tesla has taken various steps to push the factory back to work and keep it running.
Currently, the Shanghai factory is Tesla’s most productive factory. Meanwhile, Tesla’s factories in Berlin and Austin, Texas have just started production. Musk held groundbreaking ceremonies for both plants on March 22 and April 7.
However, compared to when the new factory opened, Musk seems to be more low-key now. On May 31, Musk told the “Silicon Valley Tesla Owners” channel: “Berlin and Austin are now losing billions of dollars because there is a lot of spending here, but there is hardly any output. Let Berlin and Austin lose Getting the plant up and running and getting the Shanghai plant back on track is our overwhelming concern.”
Those issues sent Tesla shares down 38% in the three months to the end of June, a record quarterly decline. During the same period, the S&P 500 fell 16%. It was the biggest drop for the U.S. benchmark since the first quarter of 2020.
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