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Why Tesla Stock Finally Bounced Today

What happened

Shares of electric vehicles leader Tesla (TSLA 1.11%) broke a three-day losing streak on Monday, bouncing back a respectable 2.3% as of 12:05 p.m. ET.

The company announced today that it will resume production at its Shanghai gigafactory as early as tomorrow at levels prior to the recent COVID-19 lockdowns there.  

Lights streak across a red electric car racing down the highway.

Image source: Getty Images.

So what

If you recall, earlier this month, Tesla’s production numbers on electric vehicles in China fell as low as 200 cars per day, as measures imposed by the government to contain the spread of COVID-19 dried up the supply of auto parts to Tesla’s factory. By today, according to a report by Reuters, the company said it’s got production back up to 1,000 units per day — and occasionally more — but that still works out to an annual production rate of maybe 365,000 units, which is well below the factory’s rated capacity.  

That’s the bad news. The good news is that Reuters reports that Tesla now thinks it will be able to get its production capacity back up to its target of 2,600 units per day — and that will work out to roughly 949,000 cars per year.

Now what

As I pointed out last week, 949,000 will be a magic number for Tesla. It will mean that at just one single factory — Gigafactory Shanghai — Tesla will be producing more cars in a year than all of its factories worldwide produced in 2021. It will put the company back on track toward its goal of producing 1.5 million electric cars per year.

And Tesla could be back on that track by as early as tomorrow. Even if coronavirus complications prevent Tesla from hitting its 1.5 million-car target this year, just knowing the company has reached its goal of producing 1.5 million cars per year will be reason to celebrate.




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