Tesla Q2 Deliveries Disappoint as Shanghai and Berlin Plants on Pause

Mandatory Credit: Photo by Patrick Pleul/AP/Shutterstock (12861811m)Elon Musk, Tesla CEO, attends the opening of the Tesla factory Berlin Brandenburg in Gruenheide, Germany, .
Patrick Pleul/AP/Shutterstock / Patrick Pleul/AP/Shutterstock

Tesla released its delivery numbers for the second quarter on July 2, and the numbers were in line with analysts’ lowered expectations. Analyst targets were broadly lowered partially due to China’s COVID-19 lockdowns, which took a toll on production. On July 5, Bloomberg also reported that the company will halt most production on its Model Y assembly line in Shanghai for the first two weeks of July, adding that TeslaMag is reporting that Tesla’s plant near Berlin will take a two-week break starting July 11.

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In the second quarter, Tesla produced 258,580 vehicles and delivered 254,695 vehicles “despite ongoing supply chain challenges and factory shutdowns beyond our control,” the electric vehicle (EV) company said in an investor relations release. The release detailed that June 2022 was the highest vehicle production month in Tesla’s history.

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Goldman Sachs analysts were expecting 261,000 deliveries, according to a note, while CNBC reported that — according to a consensus compiled by FactSet-owned Street Account — analysts were expecting deliveries of 256,520 vehicles for the quarter.

“While the year started out with 1.5 million to 1.6 million units as the bogey for 2022 deliveries (with a stretch goal of 1.7 million), now the whisper bogey is closer to 1.4 million for the year given the China issues coupled by global supply chain issues,” Wedbush Securities analyst Dan Ives wrote in a July 2 note sent to GOBankingRates. “The Street is now focused on 2H (likely up 40%-50% from 1H barring no more major China zero Covid issues) deliveries and 2023 numbers as a more normalized environment to gauge the overall health of Tesla’s delivery trajectory and top-line/EPS,” he added.

In terms of what this means for Tesla’s demand story going forward, Ives said that based on global reservation orders and wait times, demand is still outstripping supply by 15%-20% for Tesla on the Model Y front.

“While the softer macro will clearly impact demand around the edges in the coming quarters, we believe Tesla has ample demand capacity to hit ~2 million units in 2023 globally with production capacity that can exceed this number when factoring in Austin and Berlin to a normalized China production target,” he said.

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Tesla Spending Cash on Gigafactories

Earlier this month, Musk said that the two gigafactories opened earlier this year in Texas and Germany are “losing billions of dollars.”

“Both Berlin and Austin factories are gigantic money furnaces right now,” the chief executive officer said in a multi-part video interview with Tesla Owners of Silicon Valley. The interview was filmed in May and released June 22, as GOBankingRates previously reported.

Supply chain issues and COVID-19-related production issues at its Shanghai factory were a few of the issues that have been taking a toll on Tesla recently. The stock price has also suffered from a broad tech sell-off, growing recessionary fears, Musk’s stock sales to fund his planned acquisition of Twitter and concerns related to revenue and earnings growth from growing competition and rising costs, Garrett Nelson — vice president and senior equity analyst at CFRA Research — wrote in a note sent to GOBankingRates.

Electrive reports that it is not yet clear what impact the renewed production stop in July will have on deliveries in the third quarter.

“Usually, Tesla exports the cars produced at Giga Shanghai in the first month of a quarter. This is so that the cars made that quarter can still be delivered in Europe by the end of that quarter, for example. After several weeks of shipping these cars can still arrive in the last month of the quarter,” according to Electrive.

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Shares of Tesla are down 43.1% year-to-date and were down 1.9% in pre-market trading on July 5.

Tesla will report its quarterly earnings on July 20.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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