Tesla Giga Shanghai
Tinsae Aregay's picture

Elon Musk Says China’s Zero Covid Policy Has Made Tesla’s 1st Quarter Exceptionally Difficult

Today, Tesla announced yet another record delivery number for Q1 2022. Still, despite Tesla's incredible performance, CEO Elon Musk says China's zero COVID policy and supply chain disruptions have made the quarter exceptionally challenging.
Advertisement

A few hours ago, Tesla announced record delivery numbers for the quarter ending on March 31, 2022. In the first quarter of the year, the EV maker announced it delivered 310,048 vehicles which is slightly higher than Wall Street's estimate of 309,000 vehicles.

The deliveries consisted of 291,189 Model 3 and Ys and 14,724 Model S and X vehicles. And of the total number, 17% of Model S & X and 3% of Model 3 & Y sales were leases.

This is an incredible result for the first quarter of the year. Historically, in the first quarter, vehicle sales, including Tesla’s, sharply decreases due to cold weather-related logistics difficulties, holiday-associated expenditures, and tax liabilities.

Related news: Tesla (TSLA) Finishes Q1 2022 With Only 17 Inventory Vehicles In The US

However, in Q1 2021 and 2022, Tesla has been able to buck the trend thanks to a mix of capacity expansions and the sweat and tears of hard-working Tesla employees.

Making Tesla’s record delivery numbers even more impressive, Elon Musk has revealed that this was an exceptionally difficult quarter. Musk says the two main roadblocks to production and delivery were “China’s zero Covid Policy” & “supply chain interruptions”.

The supply chain disruptions are nothing new or special to Tesla. Currently, almost all auto OEMs have been forced to idle their factories since they are unable to get enough parts to build their vehicles.

Related news: Volkswagen To Follow Tesla Production Methods To Improve EV Making: Trinity Project

For example, this quarter most of the largest automakers in the world have reported that their vehicle deliveries have fallen between 10 and 30 percent. What’s new about Elon Musk’s tweet is the extent to which the automaker is being affected by China’s zero COVID policy.

China’s approach to tackling the COVID-19 pandemic is among the strictest in the world and includes such things as strict limits to travel to the country; restrictions on internal movement, mandatory 2 weeks quarantine for anyone entering the country, forced evictions and quarantines; targeted area lockdowns with the suspension of public transportation and banning all vehicle movement.

And currently, Shanghai, the location of Tesla’s China factory is experiencing all these restrictions. As a result, for the past several days, Tesla has been forced to shut down Giga Shanhai without a clear path to reopening.

And Elon Musk’s tweet shows us how much the EV maker is hurting due to these restrictions. Currently, we don’t have the exact figure for how the Shanghai COVID-19 restrictions are affecting Tesla. However, we should get more clarity as the EV maker releases Q1 earnings on April 20. Until then, make sure to visit our site torquenews.com/Tesla regularly for the latest updates.

So what do you think? Excited about Tesla’s Q1 performance? Also, what do you think is the extent of China’s zero covid policy effect on Tesla? Let me know your thoughts in the comments below.

Image: Courtesy of Tesla

For more information check out: Tesla Giga Berlin Produces 1 Model Y Every 150 Seconds Also, see Tesla Cyber Rodeo Coming To Gigafactory Texas, Large Megapack Included As Energy Backup

Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.


Subscribe to Torque News on YouTube.


Follow Torque News on YouTube, Twitter and Facebook.