How Much Will COVID-19 Affect Tesla Production?
There are high levels of uncertainty surrounding COVID-19’s economic impact. What does this hold for Tesla’s electric vehicle production?
The stock market continues to recede in response to fears of the novel coronavirus outbreak. Tesla Inc., relies on a significant share of its revenue from China, the source of the outbreak. In fact, according to MarketWatch, “In 2019, the electric vehicle maker derived $2.98 billion in revenue, or 12.1% of total revenue of $24.58 billion, from China…”
However, the consequences of the coronavirus outbreak for Tesla’s production are mixed. Due to recent supply chain disruptions, Tesla downgraded chips installed in Chinese versions of the Model 3’s autopilot system. Many Chinese customers were angry. After all, buyers were expecting the 3.0 version of the chip installed. Instead, they discovered the 2.5 version. Ever the conscientious business entity, Tesla consoled Chinese customers, guaranteeing a free hardware upgrade once supply issues resolve. Tesla’s Shanghai Gigafactory reopened for production on February 10th.
On the positive side, China recently approved production of the Model 3 Long Range. Tesla recently advertised Solar Roof orders on Twitter with their campaign “Art of the Roof”. Diversification into solar energy and manufacturing projects a bright future for Tesla. While the economic ramifications of the coronavirus outbreak remain to be seen, Tesla looks to maintain its stature in electric vehicle and clean energy production.