After a miserable few months, electric vehicle maker Tesla (NYSE:TSLA) had a massive month of deliveries in China in June, rebounding from production slowdowns caused by the COVID-19 pandemic. Tesla stock rose 2.6% in Tuesday trading, the first trading day after the company released its delivery numbers.
Lockdowns Impacted Production and Sales
The Chinese car market slowed in April and May as strict lockdowns hit vehicle production and hampered sales. The market has started to recover as the country begins to reopen gradually.
According to early estimates from the China Passenger Car Association (CPCA) on Wednesday, passenger car sales jumped 22% in June from a year ago, reversing May’s 17% drop.
Tesla (NYSE:TSLA) has also ramped up production at its Shanghai factory. In a statement released last week, the company said the problems Tesla faced in the first few months of the quarter were mostly behind.
“Despite ongoing supply chain challenges and factory shutdowns beyond our control, June 2022 was the highest vehicle production month in Tesla’s history,” the company said.
Tesla China Sold 78,000 Vehicles in June 2022
The US electric carmaker sold about 78,000 Shanghai-made vehicles last month, which is up 142% from May, according to preliminary estimates released Wednesday by the CPCA. June sales numbers were up 135% from a year ago, CPCA added. It’s a preliminary figure, but if the final figure is close, it would be a record for Tesla.
BYD, the Warren Buffett-backed Chinese electric vehicle maker, was biting at Tesla’s heels, with 69,544 all-electric vehicles sold last month, according to a company statement earlier this week.
Whatever the exact number, June’s Shanghai sales represent a significant improvement for Tesla (NYSE:TSLA). The EV vehicles maker delivered about 34,000 vehicles from its Shanghai factory in April and May combined. Tesla’s factory in Shanghai was hit hard in the second quarter by a lockdown that forced the site to stop production for 22 days from late March. The factory, which makes Model 3s and Model Ys, reopened on April 19 and resumed exports on May 11, but had struggled to bring production back to pre-lockdown levels.
Difficulties in China were seen as a key factor that led Tesla (NYSE:TSLA) to report an 18% drop in second-quarter shipments from the previous quarter, ending a nearly two-year streak of record quarterly shipments.
Before June, Tesla’s monthly delivery record from Shanghai was around 71,000 units sold in December 2021.
The 78,000 figure implies that Tesla produced perhaps 8,000 units in June in Shanghai. It’s also a solid number and indicates that the plant was at about full capacity in June, based on recent operating history.
Tesla (NYSE:TSLA) shut down its Shanghai factory again for a few days in early July, but this time the COVID-19 pandemic was not the reason. Tesla was retooling the factory to make it more productive. Tesla did not respond to a request for comment on the planned shutdown or whether the plant is operational again.
The Shanghai figure might surprise some, but investors knew an excellent report was coming. Indeed, when Tesla announced second-quarter deliveries on July 2, the company said June was its best production month yet.
After all the Shanghai delays, Tesla (NYSE:TSLA) delivered 254,695 vehicles in the second quarter, compared to 310,058 delivered in the first quarter of 2022.
China Is Rushing to Bolster Economic Growth
Chinese authorities are rushing to support growth as COVID-19 lockdowns hit the economy and caused unemployment to soar.
The Ministry of Commerce announced Thursday that the government was studying the extension of tax exemptions for electric cars.
Beijing has exempted NEV buyers from paying the 10% purchase tax since September 2014. But this policy is expected to end at the end of this year.
Featured Image: Depositphotos @BigAlBaloo
