Tesla’s (TSLA) stock crashed more than 8% on Elon Musk disclosing that he anticipates lower production this quarter and another recall that is a “real” one this time.
Yesterday, Tesla released its Q2 2023 financial results, and it beat Wall Street expectations on both revenue and earnings.
Despite the beat, Tesla’s stock was down by over 8% this morning.
The drop is attributed to CEO Elon Musk announcing after the release of the results that he expects production to be “slightly” down this quarter compared to the last.
The CEO said that it is due to “global factory upgrades”:
We continue to target 1.8 million vehicle deliveries this year, although we expect that Q3 production will be a little bit down because we’ve got some shutdowns to for — a lot of factory upgrades. So, just probably a slight decrease in production in Q3 for sort of global factory upgrades.
He didn’t elaborate on what those upgrades entail.
It is believed that Model 3 production lines are likely to temporarily shut down soon in order to upgrade to an anticipated new version of the electric sedan.
Model 3 is currently only being built at Tesla’s Fremon factory and Gigafactory Shanghai. It’s not clear if that’s what he means by “global factory upgrades” or if factory shutdowns are also anticipated at Gigafactory Berlin and Texas.
On top of the lower production in Q3 likely affecting the stock negatively today, it was also confirmed that Tesla is recalling 15,869 2021-2023 Model S and Model X vehicles. Some media are linking the recall to the stock price drop.
Unlike many recently reported Tesla recalls, this one is sort of a “real” one because it can’t be fixed with an over-the-air software update.
Tesla says that some seat belts may have been improperly attached:
Tesla, Inc. (Tesla) is recalling certain 2021-2023 Model S and Model X vehicles. The front-row seat belts may not be connected properly to the pretensioner anchors, which can cause the seat belts to detach.
While some media are linking this to the price drop, it is a relatively inexpensive issue to fix and isn’t likely to be financially material to the company.