Tesla Drops Production Numbers, What’s Next?

Following a strong first quarter producing 130,000 cars, Tesla is dropping its production numbers for this quarter by a strong fraction. Tesla is expecting to produce as few as 50,000 with very little hope of higher production numbers in the near future.

The electric car manufacturer suspended its production in late March due to the Coronavirus outbreak, and numbers have been pretty bleak since then. Car production has been borderline abysmal for the company due to complete location shutdowns. Almost all of the company’s hourly wage workers have been furloughed until the beginning of May, but with factories still closed it’s hard to believe that the production numbers will catch up.

A logo of Tesla is seen outside its showroom
Tesla, an automaker aspiring toward self-driving technology | Yuriko Nakao/Getty Images

Low production met with low demand

For the duration of the Coronavirus outbreak, almost all nonessential businesses have closed. While car manufacturers and dealerships are considered essential many other businesses haven’t been so lucky. Due to mandatory closures, many small businesses have been closing their doors for good. Businesses closing temporarily have fired their workers to allow them to file unemployment, and as the unemployment numbers skyrocket, the economy has been falling at an equal rate. Struggling to pay for more basic necessities, the need for a new car takes a back seat.

For as long as people are struggling to pay for bills and other smaller items, the car market will continue to collapse. Tesla isn’t the only car manufacturer that is going to take a hit, so it isn’t surprising to us that they are letting their production numbers fall behind. After all, why oversupply a drying-up demand?

Test Driving the Tesla Model S P90D
The Tesla Model S P90D | Michael S. Williamson/The Washington Post via Getty Images

Quarter 1 and future outlook

In Quarter 1 of the year before the official announcement of the outbreak and before the quarantine and mandatory nonessential business closures, Tesla hit the ground running, ramping up their production and delivery to meet a seemingly endless and growing demand for new Tesla products. Tesla worked to created more cars at an achievable price, and once they were able to do so they found themselves becoming a popular option. With the addition of fun updates and cool easter eggs like the Romance Mode, their amenities are quickly outnumbering the competition while still staying in a competitive price range.

Regardless of this seemingly major setback, Tesla had been gaining traction over the past several years and there is no reason to believe they will be left behind once all of the pandemic dust settles. As the state of the world seems to hang in the balance of awaiting for the infection rate to plateau, we can only guess on when the quarantine will end. While many businesses hope to reopen their doors in May, only the statistics over the next few weeks will tell if that is possible.

While the Tesla assembly plants may be cleared to open, we are unsure as to whether they will ramp up production again or try to gauge the state of the economy and minimize production numbers until the economy seems to have taken a turn for the better. For the rest of the year, only time will tell.