Tesla's Production Stumped by Shutdowns & Shortages

While Tesla managed to avoid a production slump in the first three months of 2022, a string of interconnected world events including an almost complete production stop at its Shanghai factory between April and July due to zero-covid regulations finally caught up with the corporation helmed by Elon Musk. The world’s largest electric car maker built 258,580 vehicles last quarter, down 15 percent from the first three months of 2022 but still more than every quarter before Q4 2021.

In their most recent shareholder deck, the carmaker admitted to not being able to consistently run all factories at the desired output rate due to external factors. One of these factors mentioned was a labor shortage, which, interestingly, is at least in part caused by Tesla's own policies. Not only did Musk's company announce plans to lay off ten percent of its global workforce, but it also reportedly underpays its employees at the German Gigafactory in Brandenburg, leading to a general slowdown in hiring.

As the following chart shows, Tesla ramped up its production capabilities significantly over the past few years. Having built 254,530 cars in 2018, the company's projected milestone of one million cars per year might not be reachable due to ongoing supply constraints and the worldwide economic downturn. Due to the production growth in its Fremont and Shanghai factories at the end of Q2 2002, Tesla is still expecting a "record-breaking second half of 2022". Overall, the estimated production capacity installed across its four factories amounts to 1.9 million cars per year, which would be about double the number of vehicles Tesla produced in 2021 and leaves enough room for growth over the next couple of years.