Stock Market

After a rough quarter, Tesla stopped making cars.

After the Fourth of July holiday, Tesla Inc. investors have a lot to think about: a disappointing quarter of deliveries, a record-setting month of production, and now several weeks of downtime at different plants.

Bloomberg said last month that the electric car company would stop making Model Ys on its assembly line in Shanghai for the first two weeks of July. On July 18, the Model 3 line will stop making cars for 20 days. Sources who know about the situation say that the improvements to the factory that will make it better at making both vehicles are expected to be completed by the beginning of August.

On Monday, TeslaMag said that the automaker’s Berlin plant will shut down for two weeks starting July 11. A German website said that an unnamed source said that starting in August, Tesla plans to make three times as many cars. At the plant, at least 1,000 Model Ys were put together in at least one week last month.

Tesla didn’t say anything about these goals in its July 2 news about production and delivery. The automaker gave an optimistic outlook because it made more cars in June than in any other month in its history. However, it only delivered 254,695 cars in the third quarter, which was less than what analysts had expected.

Philippe Houchois, a Jefferies analyst who has a buy rating on Tesla shares, said on July 3 that the “relative weakness” of the quarter was expected. He said that Elon Musk’s comments about the company’s new factories being “money furnaces” show that working capital problems may have had a big effect on Tesla’s free cash flow.

Shanghai’s being closed for weeks because of a COVID outbreak hurt Tesla’s performance the most in the last quarter. Thousands of workers slept at the factory to keep some work going while the company did everything it could to fix the factory and keep it running.

The factory that makes the most for Tesla is in Shanghai. Other factories near Berlin and Austin, Texas, are just getting started. Musk held opening parties at the first one on March 22 and the second one on April 7.

But a few weeks later, the CEO sounded much more sad. Musk danced in Germany and wore a cowboy hat and sunglasses in Texas during these events, but a few weeks later, he sounded much more serious.

Musk told the Tesla Owners of Silicon Valley on May 31 that Berlin and Austin are losing billions of dollars right now because they spend a lot of money but don’t make much. “Most of our attention is on making Berlin and Austin work and getting Shanghai back in the saddle.”

Tesla’s stock dropped by a record 38 percent in the three months ending in June. This was the biggest quarterly drop in the company’s history. The S&P 500 fell by 16%, the most for the leading US stock index since the first quarter of 2020.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button