Tesla suspends factories after shaky quarter

JInvestors in esla Inc. have a lot to analyze after the July 4 holiday: a disappointing quarter of deliveries, a month of record production and now several weeks of shutdowns at several factories.

The electric car maker will halt most production at its Model Y assembly line in Shanghai for the first two weeks of July, then halt the Model 3 line for 20 days from July 18, Bloomberg reported last month. . Work to upgrade the plant to increase production of the two vehicles is expected to be completed in early August, people familiar with the matter said.

On Monday, TeslaMag said the automaker’s plant near Berlin would take a two-week break from July 11. The German site said Tesla aims to roughly double its production rate from August, citing an unidentified source. The company has built 1,000 Y-models at the factory for at least a week last month.

Tesla did not mention those plans in its July 2 production and delivery statement. The automaker offered a bullish line — it made more vehicles in June than any month in its history — while disclosing 254,695 deliveries for the quarter, below analysts’ estimates.

The “relative weakness” in the quarter was expected, said Philippe Houchois, a Jefferies analyst with a buy rating on Tesla shares, in a July 3 note. He wrote that CEO Elon Musk’s comments calling the company’s new factories “money furnaces” suggest that Tesla’s free cash flow may have been affected by significant working capital disruptions.

The biggest hit to Tesla’s performance last quarter came from Shanghai’s week-long lockdown in response to a Covid outbreak. The company has gone to extraordinary lengths to reopen its factory there and keep it running, with thousands of workers sleeping on site to maintain partial production.

While Shanghai is Tesla’s most productive factory, its plants near Berlin and Austin, Texas are just getting started. Musk hosted an opening night at the former on March 22 and the latter on April 7.

While it was jovial business — Musk danced in Germany and donned a cowboy hat and sunglasses in Texas — the CEO seemed much more low-key a few weeks later.

“Berlin and Austin are losing billions of dollars right now because there’s a ton of spending and hardly any production,” Musk told Tesla owners in Silicon Valley on May 31. overwhelming our concern.

The shutdown of Shanghai and difficulties setting up new factories helped Tesla’s shares plunge 38% in the three months to June, a record quarterly decline. The S&P 500 fell 16%, the largest drop in the benchmark US stock index since the first quarter of 2020.

Tesla has scheduled its quarterly earnings report for July 20.

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