Tesla’s China Numbers Are Coming. Here’s What to Expect.

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Tesla
’s
wholesale numbers from its Shanghai plant for May should be out from the China Passenger Car Association any day now. Investors are expecting a big improvement from an awful April. Just how big an improvement, however, is anyone’s guess.

Tesla (ticker: TSLA) delivered just 1,512 vehicles from its Shanghai plant during April, according to CPCA data. That is an incredibly low result. Tesla routinely produces about 60,000 vehicles a month in China, and delivered more than 70,000 vehicles from that facility in December 2021.

China’s Covid-19 lockdown measures are the reason April was a struggle. The Shanghai plant was shut at the start of the month because of local policies. Tesla restored some production in a closed-loop setting—with workers isolated and living at the plant—around midmonth.

What investors should expect from Tesla for May isn’t easy to figure out. Production at the plant may have averaged, roughly, 50% of normal capacity for the month. That might mean 35,000 wholesale deliveries. But there was some undelivered production from April. What’s more, Covid restrictions affected more than just auto production. Supply chains, logistics, and retail sales across the country have also been affected.

Any number in the 30,000 range probably will qualify as not a shock. That is probably a good baseline to judge how things are improving in China.

Investors might be hoping for more than that. Coming into the week, Tesla stock was down about 33% year to date, worse than the 14% and 9% comparable, respective drops of the

S&P 500
and

Dow Jones Industrial Average.
Inflation and rising interest rates have hit automotive stocks harder than others. Inflation threatens auto-maker profit margins via rising costs. And rising rates threaten new car demand via affordability. Most cars are purchased using financing.

In addition to Tesla’s Shanghai and Fremont, Calif. facilities, the company opened two new plants in Germany and Texas in 2022. Those plants are producing vehicles now. Investors will get a sense of just how many when Tesla reports second-quarter delivery numbers in early July.

Write to Al Root at [email protected]