NAGA : The Tesla Shanghai plant has restored weekly output to 70% of pre-lockdown level.

Tesla has restored weekly output at its Shanghai factory to nearly 70% of pre-shutdown levels, and the firm plans to enhance output further this week as Shanghai's severe Covid lockdown comes to an end.

Production since Gigafactory reopening

Getting output back to pre-lockdown levels at Tesla's Shanghai plant, known as Gigafactory 3, has been a problem for the company amid the ongoing lockdown of the Chinese industrial hub, which forced the factory to close for 22 days.

Despite only having one shift of workers when it reopened on April 19, Giga Shanghai was able to build 10,757 Model 3 and Model Y vehicles till the end of April. According to figures supplied by the China Passenger Car Association, Tesla was able to sell 1,512 vehicles throughout the month. Giga Shanghai's April sales were down 97.7% month-over-month after Tesla sold 65,814 vehicles in March. It was also the company's lowest sales total since April 2020.

The restoration of Giga Shanghai to pre-lockdown levels is expected to accelerate in the coming weeks, especially because authorities will be lifting several requirements for firms to restart operations on Wednesday.

Impact on Tesla stocks

Tesla's (TSLA) stock rose in pre-market trading following news that the automaker's primary Shanghai factory is nearing pre-Covid output levels as the city prepares to lift its two-month lockdown.

The 22-day closure and ongoing delays related to Shanghai's lockdown will impact Q2 deliveries, according to Jefferies analyst Philippe Houchois, who predicts a total of 275,000 electronic vehicles (EVs) worldwide, down 11.3% from the record 310,000 EVs in Q1.

If Tesla succeeds in its efforts to get production back up to full speed, it could achieve nearly 950,000 vehicle production per year in China, and this will certainly put it back on track towards the goal of producing 1.5 million electric vehicles (EVs) per year. Analysts expect Tesla stock to naturally grow as Tesla ramps up the production of EVs.

Although it is highly unlikely it hits 1.5 million this year, the company will be looking at the figures in the grand scheme of things. In other words, what's more important is that Tesla gets back to consistently producing EVs per year from now on. It's hard to bet against them achieving this, and to perhaps hit 1.8 million EV production by 2023.

Tesla shares closed at $758.26 in the last trading session marking a -0.18% move from the previous day.

When will Tesla resume full production in Shanghai?

The ramp-up is anticipated to continue this week, giving hope that Tesla will be able to resume full production by June. It means that achieving another substantial year-over-year increase in global production and sales in Q2 should be no problem. At the same time, the aggregate outcome may be 50,000-100,000 units lower than the business-as-usual scenario.

Closing thoughts

Given the reopening of Tesla's Shanghai plants and the unique dynamics of the automobile industry, it will be interesting to see how Tesla stocks end the year. What is clear as the day is that Tesla's future is bright. The company is clearly on the cutting edge of a variety of industries and has the potential to become significantly more valuable over the long term.

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