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China’s Covid Lockdowns Force Drop In Tesla's Deliveries

China’s Covid Lockdowns Force Drop In Tesla's Deliveries
Tesla Inc delivered 17.9 per cent fewer electric vehicles in the second quarter compared to the previous quarter, due to a COVID 19-related closure in China that impacted its manufacturing and supply chain.
The world's largest electric vehicle manufacturer said on Saturday that it delivered 254,695 vehicles from April to June, compared to 310,048 in the previous quarter, capping a nearly two-year streak of record quarterly deliveries.
An increase in COVID-19 cases in China led Tesla to briefly halt production at its Shanghai plant, affecting suppliers' facilities as well.
With the lifting of the COVID-19 lockout, Tesla is ramping up production at its Shanghai factory, which will help enhance deliveries in the second half.
Elon Musk, CEO of Tesla, informed executives in early June that he had a "very awful feeling" about the economy and that the company needs to eliminate around 10 per cent of its workforce.
Musk has stated that demand for Tesla vehicles remains strong, but supply-chain issues persist.
Tesla raised pricing for several of its models in the United States and China again in June, after Musk's warning of substantial inflationary pressures in raw materials and logistics.
Tesla announced in a news release that June 2022 was the highest vehicle production month in the company's history.
According to Refinitiv statistics, analysts anticipated Tesla to deliver 295,078 units between April and June. Due to China's lengthy lockdown, several analysts reduced their expectations to around 250,000.
Since the third quarter of 2020, the world's most valuable automaker has posted record deliveries every quarter, weathering pandemics and supply-chain disruptions better than most automakers.
Tesla's quick expansion in vehicle production has been aided by China, with the low-cost, lucrative Shanghai facility generating about half of the company's total cars delivered last year.
Musk predicted in April that Tesla's entire vehicle production in the second quarter would be "about on par" with the first, owing to a comeback in China.
However, he recently stated that Tesla had a "very difficult quarter," citing production and supply-chain issues in China. Musk also claimed that Tesla's new factories in Texas and Berlin are "gigantic money furnaces" that are squandering billions of dollars as they try to ramp up production quickly.
Tesla shares have dropped 35 per cent this year, weighed down by Musk's proposed $44 billion takeover of Twitter Inc, the China lockout, and macroeconomic worries.

Christopher J. Mitchell

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