Tesla (NASDAQ:TSLA) stock is down nearly 4% today after reporting that it delivered 18% fewer electric vehicles (EVs) in this year’s second quarter as China’s COVID-19 lockdowns disrupted its global production.
The second-quarter decline represents the first time in nearly two years that Tesla has failed to increase its deliveries on a quarter-over-quarter basis. The Austin, Texas-based company is blaming the poor result on extended Covid-19 lockdowns in Shanghai during April and May that hurt its production in China. Tesla’s Shanghai factory produced half of the vehicles the company delivered globally in 2021.
Before today’s downturn, TSLA stock had declined 43% year-to-date to $681.79 per share.
What Happened to TSLA Stock
Tesla reported that it delivered 254,695 vehicles in the April through June quarter, compared with 310,048 vehicles in this year’s first quarter. Analysts who cover the company forecasted deliveries of 295,078 vehicles for the period.
Last month, CEO Elon Musk announced plans to cut 10% of the automaker’s staff. Tesla also increased prices for some of its vehicles in the U.S. and China during June after Musk expressed concerns about the impact of inflation on materials needed for production as well as logistics.
At the same time, Tesla has also announced plans to suspend production at its newest factory located outside Berlin, Germany only months after its assembly lines started churning out vehicles. The Berlin plant has reportedly been struggling with a lack of skilled workers and quality assurance problems that have led to recalls of vehicles that have been produced by Tesla in Germany.
Tesla said that production at its German plant should resume later this month after changes are made to improve productivity and enhance quality. The plant is expected to then move from two shifts per day to three shifts, enabling it to operate 24 hours.
Why It Matters
The disappointing Q2 delivery numbers and production shutdown show that Tesla is not immune to global issues. The company is being hit by numerous problems that are occurring with its operations around the world. The poor deliveries are likely to negatively impact Tesla’s upcoming financial results and could further erode the company’s share price.
All of this is bad news for investors who hold TSLA stock. If there is a silver lining to be found in the latest news from the electric vehicle maker, it is that the company seems determined to right its own ship. The recently announced layoffs are just one example of the steps Tesla can take to bolster its finances amid the production problems it is experiencing.
What’s Next for TSLA Stock
TSLA stock is slumping today as investors digest the big quarterly delivery miss and the halt to production in Germany. Long-term, Tesla is likely to get back on track and its share price should respond positively. But in the short-term, the company and stock are facing headwinds that appear to be getting stronger.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
