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Tesla halts production in Berlin and Shanghai

It is assumed that the shutdown in Berlin on July 11 is due to the reasons for modernizing production and expanding capacity, and the shutdown will mainly affect the Model Y and Model 3 production lines, and the work is expected to be completed by the beginning of August. On Monday, TeslaMag, citing an unidentified source, wrote that Tesla wants to double its production rate, but the company did not mention this in its July 2 announcement. By comparison, there was a week last month when 1,000 Model Ys were produced at the Berlin plant.

Musk hosted the opening ceremonies in Berlin on March 22 and Texas on April 7, while dancing in Germany and wearing a cowboy hat and sunglasses in Texas, but a few weeks later the CEO seemed calmer.

Berlin and Austin are now losing billions of dollars due to massive spending and meager production

– Musk said, then added that the operation of factories in Berlin and Austin, as well as the complete restoration of the Shanghai plant, is mostly a concern and responsibility of Tesla.

Relative weakness in the quarter was expected, said Jefferies analyst Philip Hoshua, who still recommends Tesla stocks as a buy. In his view, Elon Musk’s comments referring to his new plants as cash incinerators suggest that Tesla’s free cash flow may have been affected by significant working capital disruptions.

The biggest blow to Tesla’s performance in the last quarter was the shutdown of Shanghai for several weeks due to the Covid epidemic. The company has gone to great lengths to reopen and keep its factory there, with thousands of workers sleeping on site to maintain partial production. While Shanghai is Tesla’s most productive factory, factories near Berlin and Austin, Texas are just getting started.

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The shutdown in Shanghai and difficulties getting new plants up and running helped send Tesla shares down 38 percent in the three months to the end of June, a record quarterly drop.


Cover photo: Win McNamee / Getty Images