Tesla’s Shanghai Plant Still Isn’t Running at Full Speed. What It Means for the Stock.
An aerial view of Tesla Shanghai Gigafactory
Xiaolu Chu/Getty Images
Tesla ’s Shanghai factories are still not operating at full strength—but that’s not the only reason the EV company’s estimates still look too high.
Tuesday, Bloomberg reported Tesla (ticker: TSLA) will continue to operate its Shanghai facility in a closed-loop setting until early June, with workers isolated from the outside world because of local Covid restrictions. Monday, Bloomberg reported the plant was back at about 70% of its design capacity.
Tesla didn’t immediately respond to a request for comment about operating rates or its plans to restore full production.
The plant was closed at the end of March and restarted in early April at reduced operating rates. The 70% figure represents an improvement from recent reports.
Tesla produced roughly 10,000 vehicles at the Shanghai plant in April and delivered just 1,500 of them. Covid also kept car buyers at home. That’s a far cry from the plant’s potential. Production at Tesla Shanghai hit roughly 71,000 in December 2021.
If Shanghai operated at about 50% of design capacity in May and operates at 70% to 75% capacity in June, Tesla might deliver around 90,000 vehicles from the facility in the second quarter. Add in Tesla’s Fremont facility as well as early deliveries from new German and Texas plants and total Q2 deliveries might come in around 260,000 units.
The second-quarter consensus compiled by Bloomberg is about 300,000 units. That includes estimates from about a dozen brokers. Almost 50 analysts cover the stock. Not all estimates get fed into different aggregation sites.
The second-quarter consensus compiled on FactSet, visible to Barron’s, is about 280,000 units. That’s from about 7 estimates.
Both numbers look a little high. To be sure, there is the problem of low numbers of estimates relative to the total number of analysts. What’s more, analysts don’t always update their numbers as quickly as conditions change. The top estimates are still in the range of 350,000 units. Those numbers look like they were set before Covid-19 impacted Chinese production.
It isn’t unusual that numbers aren’t adjusted intra-quarter very often. Just something investors should be aware of.
The Shanghai situation, as well as how frequently analyst numbers get updated, make the second-quarter delivery figure a wild card. Investors seem to have discounted a bad outcome.
Tesla stock is down about 30% quarter to date, twice as much as the 15% drop of the Nasdaq Composite over the same span.
Shares have rallied recently, though. Tesla stock rose during the final three days of this past week. The three-day rally sent shares up more than 20%, rising from about $628 a share to almost $760.
Tesla stock is up another 1.6% in premarket trading Tuesday. S&P 500 and Dow Jones Industrial Average futures are both down about 0.4%.
Write to Al Root at [email protected]
