Tesla (TSLA) shares pared some of its pre-market gains Tuesday after data from China showed a sharp slowdown in sales and exports and reports suggested the country's Covid crisis has again shuttered production at its Shanghai gigafactory.
The China Passenger Car Association (CPAC) said Tesla produced just 10,757 cars last month, selling just over 1,500 and exporting none, thanks to a 22-day closure of its Shanghai facility, which makes the Model 3 sedan and Model Y crossover, during the city's Covid lockdown. The April tally is the lowest in 2 years and compares to a sale total of 65,814 in the month of March.
Overall car sales in China fell 35.7% from last year in April, the CPCA said, the biggest single-month decline since the pandemic trough of March 2020.
Reuters, meanwhile, has reported that a lack of parts will keep the plant closed for at least a day, reducing output from the typical pace of 1,200 to around 200 vehicles.
Tesla said last month that current quarter deliveries should be flat when compared to the first three months of the year, even with the multi-week shutdown of its Shanghai gigiafactory -- which made around half of the group's cars last year -- amid China's 'zero Covid' crackdown. The full-year delivery estimate stands at 1.47 million units.
"We’ve lost about a month of build volume out of our factory in Shanghai due to COVID related shutdowns," CFO Zach Kirkhorn told investors on April 21. "The Shanghai team has been extremely dynamic with the unpredictable nature of our part arrivals and our supply chain team in particular, production planning portion of supply chain, we often get very little notice when there’s part shortages coming and it’s a scramble couple days before that part is supposed to arrive to figure out how to get it here."
Tesla shares were marked 1.35% lower in early Tuesday trading to change hands at $776.52 each. Tesla shares closed at $787.11 each last night, the lowest since October 8, following a 9% decline on the session that extended the stock's year-to-date decline to around 34.4%.
The closures could test CEO Elon Musk's declaration of a "reasonable shot" for 2022 deliveries to rise 60% from last year as the billionaire pursuer of Twitter (TWTR) ramps-up production facilities in Berlin and Austin.
Tesla said on April 2 that first quarter global deliveries rose 67.8% from last year to a record 310,048 units over the first quarter, just shy of analysts' forecasts of and only 0.5% from the final three months of 2021.
That tally helped revenues rise 80.5% from last year to an all-time high of $18.76 billion, while better-than-expected automotive profit margins of 30% powered a Street beating bottom line of $3.22 per share.
"Challenges around supply chain have remained persistent, and our team has been navigating through them for over a year. In addition to chip shortages, recent COVID-19 outbreaks have been weighing on our supply chain and factory operations," Tesla said in a statement released with its first quarter earnings. "Furthermore, prices of some raw materials have increased multiple-fold in recent months."
"The inflationary impact on our cost structure has contributed to adjustments in our product pricing, despite a continued focus on reducing our manufacturing costs where possible," the company added. "Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through the rest of 2022."
