Tesla’s Death Notice in China Was Premature

Tesla's China factory produced three times more electric vehicles in May than April as the company recovers from a two-month Covid lockdown.

Aerial view of workers on cranes installing logo reading ‘Tesla’ for Tesla Gigafactory 3 at the Lingang Area on October 18, 2019 in Shanghai, China. VCG/VCG via Getty Images

Production at Tesla’s China factory has recovered from a two-month Covid lockdown, with its output in May more than tripling from the previous month and cheering Tesla investors who feared permanent damage to the electric carmaker’s global supply chain.

Tesla’s Shanghai Gigafactory manufactured roughly half of Tesla’s cars last year. In May, the plant produced 33,544 vehicles, up 212 percent from April, according to data released by the China Passenger Car Association (CPCA) today (June 9). Delivery came at 32,165 units, including about 10,000 for Chinese buyers and the rest for export, compared with just 1,152 vehicles shipped in April, CPCA data showed.

Tesla share price jumped 3 percent in pre-market trading this morning. UBS was the first bank to upgrade the stock following the May data release. It currently has a target price of $1,100 for Tesla stock. Shares are trading at around $745.

Tesla’s Shanghai factory was closed for three weeks beginning late March. Operation resumed partially on April 17, while the majority of the city’s residents and businesses were still under a lockdown. To maximize production capacity, Tesla operated on a 24-hour, two-shift schedule and ordered workers to live on site. They will be allowed to go home this weekend for the first time in seven weeks, Bloomberg reported.

May output at Tesla China was still only about half of pre-lockdown levels, but production capacity is back up at 100 percent, Tesla China told local media. Shanghai lifted lockdown measures on June 1.

Tesla is also planning a local hiring event and added two dozen new job postings for China, according to Reuters, despite Tesla CEO Elon Musk telling his executives to “pause all hiring worldwide” last week. He later contradicted himself and said total headcount at Tesla would increase over the next 12 months.

Musk has been putting off his proposed $44 billion acquisition of Twitter as Tesla stock plummeted. He has pledged to sell more than $20 billion worth of Tesla shares to fund his purchase and the falling stock price means he would need to sell more shares than he wanted to raise cash. Whether Tesla’s recovering stock price renews Musk’s appetite for buying Twitter remains to be seen. Tesla’s Death Notice in China Was Premature