Tesla (NASDAQ: TSLA) stock rose modestly on Thursday after the EV giant announced plans to resume production at the Giga Berlin plant post-Red Sea disruption.
Tesla (TSLA) has announced the resumption of operations at the Giga Berlin plant after a production stoppage due to continuous attacks by the Houthi militia on component suppliers using Red Sea transport routes.
As reported by German media outlet Oldenburger Onlinezeitung (via Electrek), the plant manager of Giga Berlin, André Thierig, stated that production will recommence on February 12, following a shutdown that started in the latter part of January.
Thierig confirmed the reactivation of the supply chains, underlining that Tesla has obtained the necessary assurance regarding the ample availability of all essential production parts for a complete restart.
Last month, Tesla indicated that components supplied from Asia would need to reroute from the Red Sea and Suez Canal to circumnavigate the Cape of Good Hope in South Africa, resulting in extended lead times and disruptions in supply chains.
Giga Berlin Plant Potential and Growth
Giga Berlin plant, operated by Tesla, focuses solely on manufacturing the Model Y SUV for distribution in European and other chosen markets. Even though the production level of this factory does not match the facilities of Tesla in Shanghai and Fremont, California, it did manage to reach a weekly production of 5,000 Model Ys in May of the previous year. Before the temporary shutdown, reports indicated that Giga Berlin reached a weekly production rate of 6,000 units.
“Yes, we have broken this milestone.”
Thierig stated that the temporary cessation of production would not hinder Tesla’s goal of achieving 6,000 units per week once the factory resumes operations. Tesla has revealed that Giga Berlin has an installed annual capacity of 375,000 vehicles, while Giga Shanghai boasts a capacity of over 950,000 units.
A shutdown spanning two to three weeks could potentially impact the production of around 10,000-15,000 Model Y vehicles. This is not a significant setback, considering that Tesla manufactured 1.846 million vehicles worldwide last year.
Tesla is not the sole automaker impacted by the disruptions in Red Sea transportation. Volvo, the Swedish automaker, also stated in January that it would halt some production at a plant in Belgium due to delays in receiving gearboxes from suppliers, forced to use more extended shipping routes.
Tesla Stock Tumbles Amid Production Concerns
The positive development of the Giga Berlin plant resuming operations contrasts with shares taking a hit this year of Tesla. Investors fret over the company’s production outlook amidst the global electric vehicle demand decline.
In its most recent earnings report, Tesla (NASDAQ: TSLA) revealed that its vehicle production growth rate might significantly lag compared to the rate achieved in 2023. This slowdown is attributed to the focus of its teams on launching the next-generation vehicle at Gigafactory Texas. In other words, Tesla indicated it would likely fall short of Street estimates, which projected 2.19 million units for 2024, representing a 21% increase from 2023.
Tesla (NASDAQ: TSLA) Stock Performance
TSLA stock inclined 1.06% to close at $189.56 on Thursday. The traders had exchanged hands with 82,830,203 (82.83 million) shares compared to the average daily trading volume of 117.12 million.