Tesla Hits New Highs and Lows with First Quarter Earnings
I have still been thinking about who is really going to be able to buy a used or new car these days. The COVID-19 pandemic is devastating global communities and overwhelming emergency rooms. The disease has progressed from a health emergency to a financial one as well.
Over 700K jobs were cut in March as unemployment rates climbed to 4.4% in the early days of April. Carmakers are among those issuing mass furloughs and halting production. On the other hand, one phenomenon that continues to persist is the electric vehicle and clean energy company Tesla. Inc.
On a recent social distancing walk around my neighborhood, I was personally surprised by the number of brand new, glistening Tesla Model 3s and Tesla Model Ys that were propped in people’s driveways. Just a month ago, Tesla made its one-millionth car, a milestone made even more impressive by the fact that the startup company originated in 2003.
Tesla stock prices surged over 17% after the company announced they delivered over 88K vehicles during Q1/20, their best first quarter ever, which is a splendid result amid the adverse circumstances related to COVID-19. This is a 40% increase in sales from this time last year, but a drop from the momentum in comparison to the company’s reported 112K units delivered in the fourth quarter of 2019.
Tesla saw setbacks early this year with the temporary closure of its Shanghai Gigafactory during the initial coronavirus outbreak in China. The Shanghai Gigafactory has reopened and is now producing 3,000 electric vehicles per week, offering a more consistent operation while other Tesla production facilities like the ones in Fremont, California and New York have closed in response to COVID-19.
Elon Musk Criticized
CEO Elon Musk was widely criticized for his reluctance to close U.S. Tesla plants while all other dominant carmakers began to shut down production in mid-March. The company argued that Tesla should be deemed as an essential critical manufacturing business based on the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency’s guidelines.
Adding insult to injury, Tesla also recently announced that they would be letting hundreds of contractors go between the Fremont factory plant and at their facility in Reno, Nevada as a result of the current business environment. Tesla is expected to feel a greater impact of the developing economic crisis in the second quarter.
In the meantime, the company is doing its part to help where possible in the middle of the coronavirus pandemic by helping to deliver life-saving devices and ventilators to New York hospitals in need. The company is also partnering with medical technology company Medtronic to build new ventilators at its New York facility.
Still Room for Innovation
Tesla is currently exploring solar power energy on its electric cars, beginning with its new Cybertruck which is expected to come out in 2021. Musk first toyed with a solar power feature on the Model 3 back in 2017 but decided against it at the time. The option would come in the form of a “deployable solar shield like a retractable hardtop” for Tesla’s electric vehicles according to Musk.