Covid lockdowns in China led to a rare drop in production and sales at Tesla in the second quarter.
The electric-car maker reported that completed sales fell nearly 18% to about 255,000 vehicles in the second quarter compared to the first three months of the year. Production fell 15% to 259,000.
The company’s Shanghai factory was closed for several weeks in April due to lockdown rules in the city aimed at tackling a surge in Covid cases. Problems sourcing parts from Tesla suppliers limited Tesla’s production even after the plant reopened. The lockdowns likely cost Tesla about 70,000 vehicles from production in the quarter, according to Dan Ives, a tech analyst at Wedbush Securities.
The company’s statement said the issues Tesla faced in the first few months of the quarter are now mostly behind it.
“Despite ongoing supply chain challenges and factory closures beyond our control, June 2022 was the highest vehicle production month in Tesla history,” it said.
Tesla doesn’t publish the geographic breakdown of sales in its monthly sales and production report. According to company documents, just 45% of its revenue last year came from U.S. sales. Industry-wide auto sales across much of China stalled for much of the quarter due to lockdowns. Most of Tesla’s sales outside the US have come from vehicles built in Shanghai.
Still, it was the first time since early 2020 that the company had reported either a revenue or production decline compared to the previous quarter. That sales are going down was also due to the lockdowns related to the early global outbreak of Covid.
Such drops were rare at the fast-growing company. Also with the decline in production and sales compared to the first quarter In 2022, both metrics came in above prior-year levels as the company reported a 25% increase in production and a 27% increase in shipments.
Analysts polled by Refinitiv had expected the company to post a 46% year-over-year increase in revenue and a 51% increase in adjusted income for the quarter. The more modest year-over-year increase in sales could dampen those expectations and put further pressure on the company’s share price. Tesla’s shares are down 35% so far this year.
The company opened two new plants during the quarter, one in Germany and one in Texas. But problems ramping up production at those plants meant that production at those plants was “puny” for the first two months of the quarter, Tesla CEO Elon Musk said in a recent interview.