Covid’s closure in China led to an unusual decline in Tesla’s production and sales in the second quarter.

tesla-posts-a-rare-drop-in-sales-in-the-second-quarter

The car manufacturer reported that sales of sales had dropped by about 18%, reaching about 255,000 vehicles in the second quarter compared to the first three months of the year. Production decreased by 15% to 259,000.
The company’s factory in Shanghai was closed for a few weeks in April due to city closure laws aimed at combating the rise of Covid cases. Problems with acquiring parts from Tesla suppliers also limited Tesla production even after the plant reopened. The closure could cost Tesla production of about 70,000 vehicles a quarter, according to Dan Ives, a technical analyst at Wedbush Securities.

A company statement said the problems Tesla faced in the first months of the quarter

A company statement said the problems Tesla faced in the first months of the quarter were now far behind.
“Despite the ongoing challenges of the supply chain and factory closure beyond our control, June 2022 was the highest car manufacturing month in Tesla history,” he said.
Tesla does not segregation in its monthly sales and production report. Only 45% of revenue last year came from U.S. sales, according to company data. Vehicle sales across the industry in most of China staggered during the greater part of the quarter due to road closures. Most of Tesla’s non-American sales come from cars built in Shanghai.

However, it is the first time since 2020 that the company has declined sales or production compared to the previous quarter. The decline in sales was also due to land closures related to Covid’s first global outbreak.
Such drops were rare in a fast-growing company. Although the decline in production and sales compared to the first quarter of 2022, both measures were up from previous levels, as the company posted a 25% increase in production and a 27% increase in deliveries.

Analysts surveyed by Refinitiv expected the company to post a 46% quarterly increase compared to the previous year, with a 51% increase in adjusted revenue. A modest modest increase in annual sales could lower expectations and put additional pressure on the company’s share price. Tesla shares have dropped by 35% so far this year.

tesla-posts-a-rare-drop-in-sales-in-the-second-quarter

The company has launched two new plants in a quarter, one in Germany and one in Texas. But production cuts in those factories mean that production in those plants was “low” in the first two months of the quarter, Tesla chief executive Elon Musk said in a recent interview.

tesla-posts-a-rare-drop-in-sales-in-the-second-quarter