Tesla electric vehicle deliveries down 18%

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Tesla’s electric vehicle deliveries fell 18 percent in the second quarter due to supply chain problems caused by China’s restrictions due to the Covid-19 pandemic, Reuters reports.

The world’s largest electric car maker said on Saturday it delivered 254,695 vehicles between April and June, up from 310,048 vehicles in the previous quarter, ending a nearly two-year cycle of record quarterly deliveries.

A resurgence of Covid-19 cases in China forced Tesla to temporarily suspend production at its Shanghai plant and also affected the activities of suppliers in the country.

Tesla is stepping up production at its Shanghai plant with easing restrictions on Covid-19, which will help boost deliveries in the second half of the year.

In early June, CEO Elon Musk told executives he had a “very bad feeling” about the economy and had to cut about 10 percent of the electric carmaker’s staff.

Musk said demand for Tesla vehicles remains strong, but supply chain difficulties remain.

In June, Tesla again raised prices for some of its models in the United States and China, after Musk warned of significant inflationary pressure on commodities and logistics.

June 2022 was the month with the largest vehicle production in the company’s history, Tesla said in a press release.

Analysts expected Tesla to report deliveries of 295,078 vehicles for the April-June period, according to Refinitiv data.

Several analysts have further reduced their estimates to about 250,000 vehicles due to prolonged restrictions in China.

The world’s largest carmaker has recorded record deliveries in each quarter since the third quarter of 2020, withstanding the pandemic and supply chain disruptions better than most carmakers.

China played a key role in the rapid growth of vehicle production by Tesla, the Shanghai plant, at low cost and profit, producing about half of the total cars delivered by the company last year.

Musk said in April that Tesla’s total vehicle production in the second quarter would be “roughly equal” to that of the first quarter, driven by a return to China.

But he recently said Tesla had a “very difficult quarter,” citing production difficulties and China’s supply chain.

Musk also said that the new Tesla factories in Texas and Berlin are “giant money furnaces” that lose billions of dollars as they struggle to increase production rapidly.

Tesla shares have fallen 35 percent so far this year, hit by Musk’s $ 44 billion acquisition of Twitter, Chinese restrictions and macroeconomic uncertainties.