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Tesla (TSLA) lost a month of build volume from Shanghai factory COVID shutdown

The period of time in which the Shanghai China Tesla factory was shut down are expected to be reflected in the company's Q2 2022.

TJ Denzer

April 20, 2022 2:58 PM

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While Tesla saw a number of wins and a solid earnings results report in Q1 2022 but not all was peachy in this latest quarter for the company. During the previous quarter, Tesla’s factory in Shanghai was shut down due to COVID-19 outbreaks. While the company was able to pull through and still meet demand for a solid quarterly finish in Q1 2022, this shutdown did cause the company to lose about a month of build volume, and it’s something that may reflect in the company’s Q2 2022 reporting.

Tesla CFO Zach Kirkhorn shared this detail regarding the temporary shutdown of the Shanghai factory, as well as its potential future impact, during the Tesla Q1 2022 earnings results conference call. In his opening remarks on the call, Kirkhorn shared enthusiasm for the quarter Tesla produced, which included a solid 32.9 percent automotive gross margin. However, that victory came with the caveat of various issues, one of which was the temporary shutdown of Tesla’s Shanghai factory, which Kirkhorn claimed caused the company to lose about a month of production volume.

Kirkhorn and Elon Musk would go on to share during the call that this production stall was unfortunate and the company will have to power through these issues. In particular, Kirkhorn suggested that the production stall could be reflected in Tesla’s Q2 2022 earnings results. However, Musk also suggested that the Shanghai Tesla factory has come back into operation “with a vengeance” and the company is still on track to move a massive number of vehicles throughout the fiscal year.

With Tesla getting ahead of certain limitations, such as getting around nickel and cobalt shortages with use of lithium iron phosphate (LFP) battery packs on a large portion of its vehicles, it will be interesting to see how the Shanghai shutdown affects the company’s Q2 2022 nonetheless. Stay tuned for further financial reporting here at Shacknews.

TJ Denzer

Senior News Editor

TJ Denzer is a player and writer with a passion for games that has dominated a lifetime. He found his way to the Shacknews roster in late 2019 and has worked his way to Senior News Editor since. Between news coverage, he also aides notably in livestream projects like the indie game-focused Indie-licious, the Shacknews Stimulus Games, and the Shacknews Dump. You can reach him at tj.denzer@shacknews.com and also find him on Twitter @JohnnyChugs.