To Make up for Capacity Shortage from Shanghai Factory, Tesla Pushes California Factory above Capacity Limit in 2Q22

published: 2022-05-03 9:30 | editor: | category: News

In order to compensate for the capacity shortage caused by Shanghai's lockdowns, and to ensure that its 2nd quarter financial report would not look too bad, Tesla has recently given an all-out effort to expand the capacity at its California factory. As pointed out by an analyst from Global Equity Research in its latest memorandum, this automaker is preparing an astonishingly huge production in the second quarter. The capacity of Gigafactory in Northern California recently exceeded its limit by 20%. 

Tesla has been maintaining its rapid growth pace for the past 2 years. Even though there are pandemics, chip shortages, maritime shipping congestions, and inflation, Tesla never stopped making profits. A second quarter of a year is the most important season for this automaker. Due to the growing demand, Tesla particularly doesn't want to stop the ongoing profit-making momentum in 2022.

The Shanghai Gigafactory contributes to nearly 50% of the global capacity of this carmaker, but it halted production for about 3 weeks due to the lockdown order in April. Even after resuming its production, this Gigafactory's capacity still couldn't rebound to its peak levels. To accommodate the lost progress of the Shanghai Gigafactory, Tesla decided to overrun its California Gigafactory. 

The Gigafactory in Fremont, California is Tesla's first and only factory that can manufacture all four models of Tesla. This Fremont factory's current annual capacity is 600,000 cars, or 150,000 vehicles per season. At present, Tesla is hoping to make an additional 30,000 cars from this factory in the 2nd quarter, in order to satisfy the rising demand of electric vehicles.

In May, the Fremont factory showed an extreme improvement. Its production, shipments, and deliveries all surpassed previous levels. Trip Chowdhry, an analyst, regularly visits Tesla's California factory in each season. According to his on-site records and estimation, this factory is operating above 10% or 20% of its previous capacity.

In particular, the number of trucks that are responsible for carrying raw materials and components to this factory rose by 20%. Tesla seems determined to sustain its target of 300,000 car deliveries per quarter, so its output has kept rising in 2Q22.

Chowdhry continues to give a rating of “Buy” on Tesla’s stock. His US$2,300 price target for Tesla stock is much higher than the other analysts’. Tesla’s recent shares, however, remained sluggish because its CEO Elon Musk sold Tesla stocks to buy stocks of Twitter. Around May 3rd, Tesla's stock price finally rebounded to US $920.

(Photo credit: Tesla)

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