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Tesla deliveries fall, affected by Covid-related China shutdown

(July 3): Tesla Inc delivered 17.9% fewer electric vehicles in the second quarter compared to the previous quarter, as China’s Covid-19 shutdown disrupted its production and supply chain.

The world’s biggest electric carmaker said on Saturday it delivered 254,695 vehicles between April and June, down from 310,048 vehicles in the previous quarter, ending a nearly two-year streak of record quarterly deliveries.

A surge in Covid-19 cases in China had forced Tesla to temporarily suspend production at its Shanghai factory and also affected supplier facilities in the country.

Tesla is ramping up production at the Shanghai factory as the Covid-19 lockdown eases, which will help boost second-half deliveries.

In early June, CEO Elon Musk told executives he had a “super bad feeling” about the economy and needed to cut around 10% of the electric carmaker’s staff.

Musk said demand for Tesla vehicles remains strong, but supply chain challenges remain.

In June, Tesla again raised prices for some of its models in the United States and China, after Musk warned of significant inflationary pressures in raw materials and logistics.

June 2022 was the highest vehicle production month in company history, Tesla said in a press release.

Analysts expected Tesla to report deliveries of 295,078 vehicles for the April-June period, according to Refinitiv data. Several analysts had further reduced their estimates to around 250,000 due to China’s prolonged lockdown.

The world’s most valuable automaker has posted record deliveries every quarter since the third quarter of 2020, weathering the pandemic and supply chain disruptions better than most automakers.

China has been instrumental in rapidly ramping up Tesla’s vehicle production, with the lucrative, low-cost Shanghai plant producing around half of the total number of cars the company delivered last year.

Musk said in April that Tesla’s overall vehicle production in the second quarter would be “roughly on par” with the first quarter, driven by a rebound in China.

But he recently said Tesla had a “very difficult quarter”, citing production and supply chain issues in China. Musk also said Tesla’s new factories in Texas and Berlin are “gigantic money furnaces” losing billions of dollars as they struggle to rapidly ramp up production.

Tesla shares have fallen 35% so far this year, hit by Musk’s proposed $44 billion acquisition of Twitter Inc, China’s lockdown and macroeconomic uncertainties.