Tesla warns on shutdown as Musk calls for end to lockdown

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Demand for Tesla’s electric cars held up in the first three months of the year, despite upheavals caused by the coronavirus pandemic.

Quarterly revenues jumped 30% from last year to $5.9bn (£4.7bn), allowing the firm to turn a small profit of $16m.

It is the third quarterly profit in a row for the company, marking a turnaround after years of losses.

But Tesla said forced shutdowns and limits on deliveries had clouded its forecast for coming months.

“Forcing people to stay in their homes and infringing their constitutional rights…that’s my personal opinion,” Tesla boss Elon Musk, who has been opposed to the lockdown measures, told investors in an earnings call on Wednesday.

“It will cause great harm, not just to Tesla but to many firms. While Tesla will weather the storm…we have lots of suppliers who might not get through this and are struggling. People’s lives are being destroyed in real time.”

He added that Tesla was “a bit worried about not being able to resume production in the Bay area”, and said this should be considered “a key risk” because the firm only has two car factories – one in Shanghai and one in Fremont, California.

Mr Musk stressed that he did not mind if people wanted to stay at home, but he was concerned that citizens were being forced to lose their livelihoods as the lockdown continued.

Mr Musk had resisted closing Tesla’s main car factory, located in California, waiting several days after the state’s shelter-in-place order in March to formally suspend production.

More recently, he has celebrated plans to relax lockdown orders, writing on Twitter “FREE AMERICA NOW” early on Wednesday. He had previously dismissed concerns about the coronavirus as being “dumb”.

Uncertain guidance

Tesla said it still had the ability to deliver more than 500,000 cars this year, despite announced shutdowns. But it warned that this could change, as re-opening dates remain unclear.

“It is difficult to predict how quickly vehicle manufacturing and its global supply chain will return to prior levels,” the firm said.

“Due to the wide range of potential outcomes, near-term guidance … would likely be inaccurate.

“For our US factories, it remains uncertain how quickly we and our suppliers will be able to ramp production after resuming operations. We are coordinating closely with each supplier and associated government.”

Tesla’s performance comes as car sales have plunged. Ford earlier reported a $2bn loss in the first quarter and warned investors that it expected another $5bn hit in the April-June period.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, thinks it is no surprise that Tesla is withdrawing guidance, given the economic risks ahead.

“If the world slips into a potentially dramatic economic slowdown, demand for big ticket items will likely fall and we would be very surprised if Tesla escape unscathed,” he said.

“Given that the group’s only recently achieved sufficient scale to be sustainably profitable, that would be less than ideal.”

Mr Musk’s commentary on the virus, which has also included promotion of unproven medicines, has drawn outcry.

It has also revived memories of the controversies he stirred using the social media platform two years ago, when he made several accusations against a British cave diver following a rescue operation in Thailand.


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