Tesla’s (TSLA) Shanghai facility ceased operations on Monday owing to material shortages, according to Reuters. Furthermore, demand for Tesla electric vehicles decreased drastically in China in April when the government tightened quarantine restrictions.
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Shanghai officials have strengthened the overall lockdown, perhaps extending travel restrictions for a month, adding to investor concerns.
Tesla sales in China plunged 98% from a month earlier in April, according to statistics released on Tuesday by the China Passenger Car Association (CPCA), highlighting the impact of China’s COVID-19-related limitations.
According to the CPCA, the company produced 10,757 vehicles after reopening, with 1,512 vehicles sold. In contrast, this is the lowest sales total since April 2020: In March, 65,814 Tesla vehicles were sold; and in December 2021, about 71,000 units were sold.
The issue also harmed Tesla’s Chinese competitors. NIO, for example, delivered around 5,100 vehicles in April, which was less than half of the over 11,000 vehicles delivered in November 2021, the company’s greatest month ever. NIO does not build its vehicles in Shanghai, but the lockout has impacted its supply chain.
According to data, Tesla did not ship the Chinese-made Model 3 and Model Y from its Shanghai facility in April. However, sales of battery-electric cars and plug-in hybrids, a sector China is targeting with stimulus, increased by more than 50%, due to particularly good performances by BYD and SAIC-GM-Wuling.
Another automobile group reported last week that overall car sales in China plunged 48% in April as a result of the lockdown, which stopped manufacturing, limited showroom traffic, and reduced expenses.
Tesla’s (TSLA) stock has been down 25.5% in the last month. Over the same time frame, the S&P 500 and Nasdaq Composite are down around 15% and 11%, respectively. Tesla shares, meanwhile, did not respond to the production announcement on Tuesday morning.
Even with a multi-week closure of the gigafactory in Shanghai, which produced almost half of the company’s vehicles last year, Tesla stated last month that deliveries in the current quarter should remain flat compared to the first three months of 2022.
Tesla is anticipated to deliver about 300,000 vehicles in the second quarter, but Wall Street projections range from 250,000 to 350,000 units, with few analysts updating their forecasts in recent days.
However, the forecasted supply of 300,000 units remains viable. If production improves by mid-May and into June, Shanghai could manufacture around 135,000 vehicles, as could Tesla’s Fremont, California facility, and maybe 5,000 to 10,000 vehicles at each of Tesla’s new German and Texas operations.