Just as investors brace to hear the impact of a three-week pause of production in Shanghai because of governmental restrictions related to COVID-19 on Tesla's (TSLA 1.85%) view for full-year deliveries, investors in the electric-car maker are getting some good news about one of the company's other factories. Production at Tesla's recently opened factory in Berlin is already ramping up to decent volume.
According to German auto news website Automobilwoche (via Electrek), production at Tesla's new Berlin factory has already achieved a weekly rate of 350 Model Y vehicles. While this may sound like a small figure, it's actually quite impressive.
The S curve of new factories
New automobile factories never start production at their full production capacity. Indeed, quite the opposite happens. Production at new auto plants ramps up on an S curve, with paltry growth for some time in the beginning -- usually followed by exponential growth after production line components have been fine-tuned and supply chain partners have streamlined their operations and delivery logistics.
Automobilwoche is reporting that Tesla is already building around 350 Model Y units per week and could be making about 1,000 units per week by the end of April. Progress like this during a supply constrained environment is promising news for Tesla investors.
Challenges in Shanghai
Just as Tesla's vehicle production is ramping up in Berlin, the electric-car maker is dealing with the impact of a three-week shutdown of its factory in Shanghai. Tesla missed out on an estimated production of around 40,000 vehicles because of the shutdown.
Image source: Tesla.
It's possible that a pause in production at Tesla's factory in China will lead management to reduce its full-year outlook for vehicle deliveries. But with production seeming to go well in Berlin, this could help offset some of the challenges associated with its production pause in China. Further, Tesla has another new factory in Texas that recently started production. The new factory is similarly designed to eventually contribute substantial production volume for the company. But like the Berlin factory, it will take time for production volume to ramp up to meaningful levels.
Investors will be eyeing Tesla's first-quarter earnings report on Wednesday to see how the automaker is faring amid a challenging time for the auto industry. We already know that the company was able to deliver a record number of vehicles in Q1. In fact, deliveries soared on a year-over-year basis, growing 68% year over year. But paltry sequential growth of less than 1% provided a glimpse into how the current environment and Tesla's challenges in Shanghai are impacting the company's business in the near-term.
When Tesla reports earnings after market close on Wednesday, investors should watch both management's guidance for full-year deliveries and any commentary from management on how well production is going at new factories in Berlin and Texas. In addition, any more information regarding management's expectations for Tesla's factory in Shanghai would be helpful, too.
