TESLA’S OUTPUT FELL IN THE SECOND QUARTER OF 2020 BECAUSE OF SUPPLY CHAIN DISRUPTION AND PLANT SHUTDOWNS

US electric vehicle (EV) producer Tesla’s output fell sharply in the second quarter of 2020 because of supply chain disruption and plant shutdowns, but deliveries were relatively unscathed despite the Covid-19 pandemic.

In all, the company produced 82,272 EVs in March-June, down by 19.9pc from 102,672 in the previous quarter and by 5.5pc from 87,048 in the second quarter of 2019. The drop was caused by the closure of Tesla’s Fremont assembly plant in California for almost two months from 23 March. The plant reopened in May.

Overall vehicle deliveries were down on the year by 4.8pc at 90,650 but edged up by 2.5pc compared with the first quarter of 2020.

Tesla accounts for up to 60pc of the US EV market, which totalled around 325,000 plug-in EV sales in 2019, according to automotive research firm Edmunds. Last year, Tesla produced 365,194 vehicles and delivered 367,200 globally.

The pandemic has highlighted the fragility of automotive supply chains, especially for EV makers which rely on battery materials across the world. The initial outbreak in China forced the company to shut its Shanghai factory temporarily. But Tesla has fared well compared with other automakers with large footprints in Europe, which was mostly locked down for much of the second quarter of 2020.

Tesla recently signed a deal with Glencore to secure long-term supply of Cobalt. Most of Glencore’s cobalt comes from the Democratic Republic of the Congo, which has not seen any large mine shutdowns yet. There is a risk that the virus could spread in the country, which has limited infrastructure to prevent it.

Several mines which produce battery metals have closed during the pandemic. The Ambatovy nickel and cobalt project in Madagascar is expected to be shut until the end of the year, and Sumitomo’s nickel and cobalt mines in the Philippines were shut in May but have since reopened. Lithium projects in Chile have continued operations, but the number of virus cases in South America is rising rapidly.

By Thomas Kavanagh

Ref: http://nanthavictor.com

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