Reuters says that Tesla expects production in Shanghai to drop by more than a third in the second quarter.
The output of Tesla’s (TSLA) assembly plant in Shanghai is expected to drop by more than a third this quarter compared to Q1. This is because the country’s zero-COVID lockdown has hurt production more than expected.
A production memo seen by Reuters shows that the company that makes electric vehicles (EVs) wants to make more than 71,000 units at its Shanghai factory this month. After the company said it made 44,301 EVs between April and May, the total number of units made in the second quarter would be 115,300.
The China Passenger Car Association says that Tesla (NASDAQ:TSLA) made 178,887 cars in the first quarter at its Shanghai factory (CPCA).
Elon Musk, who runs Tesla, said earlier this year that he thought the Shanghai plant would make about as many cars as it did in the first quarter.
He said at the time, “It’s also possible we could pull a rabbit out of a hat and be a little higher.”
Several analysts recently lowered their price targets for Tesla stock, saying that China lockdowns will likely hurt Q2 sales and deliveries.
Philippe Houchois, a Jefferies analyst, lowered Tesla’s price target from $1,250.00 to $1,050.00.
“We cut FY volume by 85,000 units, or 5%, to 1,415k, which is a 52% increase in units per year. This was mostly due to a 30-day production loss, a gradual return to work by the end of June, and a slow start in Austin. Houchois wrote in a note sent to clients in late May, “Our estimates have Q4 Shanghai running at an annualised 950k, with modest FY outputs of 50/75k units in Austin/Berlin.”
The stock of Tesla is up 1% before the market opens on Friday.
