Tesla’s Shanghai COVID-19 Closure Costing 2,000 Cars a Day — Will Stock Value Take a Hit?
Set to resume production at its Shanghai factory, Tesla has now further delayed the reopening following COVID-19 lockdowns.
The Shanghai factory, located in the Pudong district east of the city’s Huangpu River, suspended production from Monday to Thursday after the city launched a two-stage lockdown to combat a surge in COVID-19 cases. Tesla initially planned to resume production that day, but according to a memo obtained by Reuters, it has cancelled production plans for April 1 and April 2.
Two people familiar with the matter said Tesla had yet to secure permits from the Shanghai government for its trucks to deliver assembled electric cars outside of Pudong to western parts of the city, Reuters added.
Electrek reported that based on the estimated production rate at Gigafactory Shanghai, Tesla could be missing out on about 2,000 vehicles per day as the factory is shut down, adding that it comes during the last days of the quarter, and Tesla is expected to release its Q1 2022 delivery and production numbers during the weekend. Tesla is expected to deliver between 310,000 and 320,000 vehicles in the first quarter of 2022, up from about 309,000 deliveries in the fourth quarter of 2021, according to Barron’s.
Peter Cohan, a senior lecturer at Babson College and author of “Goliath Strikes Back,” told GOBankingRates that Tesla is expected to ship at least 1.4 million vehicles in 2022. “I do not think that the delayed Shanghai vehicles will make a significant dent in this number and the stock is not responding in a way that makes this a big negative surprise,” he said.
Tesla’s stock was up 0.6% mid-morning on April 1.
Earlier this week, Tesla announced it will ask shareholders to vote at this year’s annual meeting to authorize additional shares in order to enable a stock split, which sent the stock jumping 5.7% in pre-market trading on March 28.
“We view Tesla’s move following the likes of Amazon, Google, Apple and initiating its second stock split in two years as a smart strategic move that will be a positive catalyst for shares going forward,” Wedbush Securities Dan Ives wrote in a note sent to GOBankingRates.
Earlier this week, RBC analyst Joseph Spak raised his delivery estimate about 3% to more than 325,000 units, Barron’s reported, but New Street Research analyst Pierre Ferragu and Credit Suisse analyst Dan Levy believe that deliveries will be closer to 310,000, partly because of the new Chinese COVID restrictions.
On Jan. 2, Tesla reported blockbuster fourth-quarter delivery figures, which made the stock jump. The company reported deliveries totaling 308,600 electric cars and full-year deliveries amounting to 936,172 vehicles. “Thank you to all of our customers, employees, suppliers, shareholders and supporters who helped us achieve a great year,” the company said in a release at the time. The figures beat analysts’ expectations as many had anticipated Tesla deliveries of about 267,000 in the fourth quarter and 897,000 for all of 2021, as GOBankingRates previously reported.