COVID-19 has totally crippled humanity, both socially and economically. The world has entered into a recession or at least is one the brink of one, as was warned recently by the IMF Chief Kristalina Georgieva. Companies across the spectrum have suffered losses of astronomical magnitude, with adjusted revenue and production numbers being the order of the day. A company, that was somewhat unfazed (or tried to act like one) in the initial stages of the pandemic spread, was Tesla.
The automobile giant had production going on at multiple locations even as many places across the world had entered lockdowns (Tesla’s factory in Fremont, California shut operations as late as March 23rd), thanks to Elon Musk’s lame rationalization for not shutting down operations. But, as is the case with every sort of socio-economic activity right now, Tesla also hit a speed breaker.
Initially, the stocks suffered a free-fall, shedding almost 50% from around $1000 to $500. And now, many analysts have cut projections for the production and delivery of units, citing COVID-19 disruptions.
Tesla has been a company that has relied on “quarter-end surge” to maximize production come quarter-end. Musk is often seen issuing a rallying cry to his “troops” to deliver as many vehicles as possible to customers. But the “magic wand” has failed to work this around, owing to severe lockdowns and social distancing guidelines being in place.
“Tesla typically delivers a disproportionate share of its quarter’s units in the last two weeks of the quarter,” Adam Jonas, an analyst at Morgan Stanley, wrote in a report Monday, reported by Bloomberg. “Given the disruption to production and logistics bandwidth, we would be prepared for a weak number.”
Musk did try to play a strategic hand though, introducing a touch-less delivery option, his own version of the “zero-contact delivery” that many food delivery portals introduced back in February. But that move has apparently failed to take-off.
Tesla was reported to have delivered roughly 77,400 units worldwide last quarter, a steep 30% drop from the last 3 months of 2019, where it reported a revenue of around $7.4 Billion. The automobile giant had estimated deliveries to exceed 500,000 “comfortably” in January 2020. But the company was “in the early stages of understanding if and to what extent we may be temporarily impacted by the coronavirus,” Chief Financial Officer Zachary Kirkhorn explained.
Even during the lockdowns, Tesla was able to deliver a few units, some of them in the virus “hotspots.” Howard Feinstein, a resident of a rural community in Seattle, USA, took delivery of his $69,200 Model Y Performance on March 28. Two Tesla employees dropped off the vehicle directly to his house.
“Tesla went out of their way to make sure that we didn’t have any contact,” Feinstein said in a phone interview. “We went over the plan by phone prior to their arrival, and the employees always stood more than 10 feet away from me.”
While production has totally been disrupted in the US, Tesla was able to get the Shanghai giga-factory up and running again, with help from the Chinese authorities, but a normalization of the business is a distant dream for now.