Tesla’s second-quarter production and delivery results are strong. Experts were furious to predict the electric car company’s ability to meet projections. Last week, Reuters explained why it thought Tesla was expected to end its nearly 2-year record quarterly delivery series. Reuters was right that Tesla did not set another delivery record, but the company set a new monthly production record in June. Let’s look at Tesla’s work behind the scenes to continue dominating the electric vehicle market.
First, the culprits of the missed delivery performance included the prolonged shutdown related to COVID-19 in Shanghai, the effects the shutdown had for a time on Tesla’s production and supply chain, and the slow nature of the new factory facilities.
However, Tesla’s attempts to withstand the pandemic and supply chain disruptions have so far proved far better than most car manufacturers.
What has Musk mentioned about Tesla Q2’s likely gains?
Tesla CEO Elon Musk said in April that total Tesla vehicle production in the second quarter would be “roughly on par” with the first quarter, driven by a rebound in China. At the launch of the Gigafactory in Austin that same month, Musk celebrated “a new phase of Tesla’s future.” Giga Austin is the site of the current production of the Model Y and the future Cybertruck.
But more recently, Musk stepped back and said in an email: “This has been a very tough quarter, mainly due to supply chain and production challenges in China. So we need to focus. much to recover! “
Musk also joked that Tesla’s new factories in Texas and Berlin are “giant money furnaces,” losing billions of dollars as they struggle to increase production rapidly. He admitted that the car manufacturer’s supply chain problems are not over and keeping the factories running remains a concern.
Wedbush analyst Dan Ives believes the “line in the sand” for Tesla deliveries in the second quarter is 250,000. Ives has stated that anything below will be a disappointment.
The Tesla-China factor
Tesla’s lucrative Shanghai factory produced about half of the total cars delivered to the company last year, but Ives estimates the shutdown ended with about 70,000 units during the quarter.
Tesla is not as deterred as it might initially seem. In fact, according to the Shanghai Securities Journal, Tesla has launched a new program in China to encourage car buyers to swap their vehicles with internal combustion engine (ICE) for a new electric car. For Tesla buyers participating in the program, the new ICE exchange program will apply to Tesla vehicles ordered in China from July 1, 2022 and will continue until the end of the year.
In order for buyers to take advantage of the benefits of the program, they will need to complete and sign a swap agreement before receiving their new Tesla. Customers who take advantage of the exchange program will receive price protection for 14 days, an extended 14-day warranty period, and a free 90-day trial of Tesla’s enhanced autopilot feature. Tesla will also visit the consumer’s home to assess their change vehicle.
Barron’s says June sales in China are crucial for Tesla.
Tesla attempts and positive results at the end of the second quarter
Several news items showed how diligently Tesla’s workforce was working to achieve a satisfactory result at the end of the third quarter. A series of tweets describe how Tesla executives were launching in overtime to deliver cars to new Tesla buyers.
Great delivery experience of new Teslas all over LA today! LA traffic not so much
– Franz von Holzhausen (@ woodhaus2) June 30, 2022
I know many executives who delivered cars over the years. It’s a lot of fun to show up at someone’s house with their new Tesla. But Franz delivering your new car is very special, of course 🙂 I mean, he designed the car that someone just received 😂
– Martin Viecha (@MartinViecha) June 30, 2022
Another example of Tesla’s continued optimism came from the Los Angeles Times, which included an article in which owners were flipping their Tesla for a quick profit. Although Tesla raised the price of its Model Y by 5% to $ 65,990 in June, that hasn’t stopped the fins.
Former head of the Securities and Exchange Commission, Larry Harris, says turning a Tesla around is indicative of how some investors adapt to an uncertain market to their advantage.
“When supply and demand are not aligned, you get these opportunities where smart people can take advantage. We’ve seen this in all kinds of markets. When scarce commodity prices change significantly, some buyers realize that l ‘article has a greater value for others than for them, and they will sell to people willing to pay more than they would and benefit from it.’
Below are the monthly vehicle registration data for S&P Global Mobility. Tesla was by far the leading brand in terms of market share of electric vehicles in the United States. The company had 61% of the market in April, with Ford in second place with 8%, and Hyundai and Kia with 6% each. The 14,152 Tesla Model Y records were 4 times larger than the 3,287 of the Ford Mustang Mach-E in April.
Tesla has a “halo around the brand that is extraordinary and unique,” says Tom Libby, an analyst at S&P Global Mobility.
Ives states that, “while the softer macro will clearly affect demand at the limits of the coming quarters,” Tesla is likely to try a broad demand capacity to reach 2 million units by 2023 worldwide, with a production capacity that can exceed this number when it becomes a factor. in Austin / Berlin to a normalized China.
It was also interesting to see that Giga Berlin has announced a new 3rd round for production. Currently, workers register shifts at the Tesla Gigafactory Berlin at 6:30 am or 2:30 pm. A new third round will begin on July 4th. This means that the factory will operate 24 hours a day.
The Tesla plant in Germany currently employs about 5,000 employees and the company plans to continue hiring hundreds more each month. The Frankfurt (Oder) employment agency opened an office in Grünheide when the Tesla factory opened and has found jobs in Giga Berlin for more than 600 jobseekers. According to German Tesla columnist Mos, Tesla’s goal is to have 12,000 Giga Berlin workers by the end of 2022.
Great milestone 🚗⚡ ♥ ️
– Martin Viecha (@MartinViecha) June 18, 2022
Final thoughts
Gene Munster, managing partner of venture capital firm Loup Ventures, was cautious looking ahead to the rest of 2022, saying the third quarter will be difficult for Tesla and other tech companies, citing a recession risk.
The Forex investment analyst site predicts that Tesla will recover quickly from the severe disruption observed in the second quarter; part of this anticipation is fueled by the anticipation of a rise in deliveries in the second half, driven by the hope that its new factories in Berlin and Texas will contribute to growth in the future.
Shares of Tesla have fallen 37 percent since early April, potentially hurt by Musk’s Twitter deal and the blockade of China, as well as broader economic and stock market concerns. Shares of Tesla fell slightly at noon on Friday to $ 671.20 ($ -2.22 or .33%).
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