- Tesla stock drops on Tuesday after announcing Giga Berlin shutdown.
- Tesla is in the midst of laying off more than 3% of its workforce.
- TSLA delivery data for Q2 fell slightly short of expectations.
Tesla (TSLA) stock traded down 4.3% on Tuesday to $652 after the electric vehicle leader missed vehicle delivery data over the weekend and announced it would be halting production at its Berlin factory in order to increase shift capacity and begin manufacturing electric motors in a separate wing.
After ramping up the Gigafactory Berlin to 1,000 vehicles a week, Tesla is stepping back and reevaluating. Shutting down and reorganizing production at the plant will take two weeks, but management says it will allow Tesla to run a third shift and increase production in the longer run. Additionally, the company has been importing its electric motors from Shanghai to install in vehicles built in Berlin, but the factory upgrade will allow local production of electric motors to occur in a newly revamped hall at the 4,500-employee Berlin facility.
Gigafactory Berlin still seems to be ahead of schedule compared with the new factory in Austin, Texas, according to Electrek. Part of the problem at the latter plant was that Tesla was installing the new 4680 battery cells instead of the older, more common 2170 cells being used in Berlin.
Tesla delivered its delivery figures for the second quarter over the weekend. Deliveries company-wide came in at 254,695. This missed expectations for 256,520 narrowly and demonstrated the difficulty in getting Shanghai production back on track after a shutdown related to covid.
Wedbush's Daniel Ives had opined last week that hitting 260,000 deliveries would be greeted as positive by Wall Street. Quite a few investment banks reduced their price targets on TSLA stock last week, but generally they are at 1,000 or above. This makes these delivery numbers more interesting. Could price targets decline further this week? JPMorgan is already out with a client note saying that rising battery metals prices, which in some cases add as much as $10,000 to the price of a vehicle, cannot be added to reservation prices and may lead to poor results in the latter half of the year.
Tesla remains in the midst of a lay-off strategy that consists of cutting its "white-collar" employee count by 10% but increasing its hourly worker count. Salaries were recently raised by 6% at the Berlin factory in order to assuage complaints from the union despite CEO Elon Musk suggesting the plant was "burning" money.
TSLA stock is now trading inside a wedge structure. The apex where the top and bottom lines intersect is at $675, making that price once to beat for bulls. Longer-term support remains at $620, the swing low from May 24. Since then Tesla stock has experienced two higher lows and three lower highs. A break below $620 could send TSLA to support at $550. Likewise, a break above the descending top line, now at $735, would also lead to a rally. The target above $735 is $792. The Moving Average Convergence Divergence (MACD) is trending higher in optimistic fashion as is the 9-day and 21-day moving average relationship.
Tesla (TSLA) chart, daily