Tesla investors have a lot to parse after the July 4 holiday: a disappointing quarter of deliveries, a record month of production, and now several weeks of downtime at multiple plants.
The electric-car maker will halt most production on its
Model Y assembly line in Shanghai for the first two weeks of July, then stop
the Model 3 line for a 20-day stretch starting July 18, Bloomberg reported last
month. Upgrade work at the factory to boost the output of both vehicles is
expected to be completed by early August, people familiar with the matter said.
On Monday, TeslaMag said the carmaker's plant near Berlin
will take a two-week break starting July 11. The German site reported that
Tesla aims to roughly double its production rate from August, citing an
unidentified source. The company built 1,000 Model Ys at the factory for during
least one week last month.
Tesla didn't mention these plans in its July 2 production
and deliveries statement. The carmaker offered an upbeat line — it made more
vehicles in June than any month in its history — while disclosing 254,695
deliveries for the quarter, short of analysts' estimates.
The “relative weakness” of the quarter was expected,
Philippe Houchois, a Jefferies analyst with a buy rating on Tesla shares, said
in a July 3 note. He wrote that Chief Executive Officer Elon Musk's comments
referring to the company's new plants as “money furnaces” suggest Tesla's free
cash flow may have been affected by significant working capital disruptions.
Tesla shares fell as much as 0.7 percent shortly after the
start of premarket trading Tuesday.
The biggest blow to Tesla's performance last quarter came
from Shanghai's weeks-long lockdown in response to a Covid outbreak. The
company went to extraordinary lengths to reopen its factory there and keep it
running, with thousands of workers sleeping on-site to maintain partial
production.
Whereas Shanghai is Tesla's most productive plant, its
factories near Berlin and Austin, Texas, are only just getting going. Musk
staged an opening party at the former on March 22 and at the latter on April 7.
While those were jovial affairs — Musk danced in Germany and
donned a cowboy hat and shades in Texas — the CEO sounded much more subdued a
few weeks later.
“Berlin and Austin are losing billions of dollars right now
because there's a ton of expense and hardly any output,” Musk told the Tesla
Owners of Silicon Valley on May 31. “Getting Berlin and Austin functional and
getting Shanghai back in the saddle fully are overwhelmingly our concern.”
The Shanghai shutdown and struggles ramping up new plants
contributed to Tesla shares plunging 38 percent in the three months that ended
in June, a record quarterly drop. The S&P 500 slumped 16 percent, the
biggest decline for the benchmark US stock index since the first quarter of
2020.
Tesla scheduled its quarterly earnings report for July 20. ©
Bloomberg