Elon Musk encourages Tesla staff while warning of 'tough quarter'

Tesla Inc. has had a “very tough quarter” as it struggles with supply-chain snags, Chief Executive Officer Elon Musk warned in an internal memo, imploring workers to help get the electric-vehicle maker back on track.

“This has been a very tough quarter, primarily due to supply chain and production challenges in China,” Musk said in an email to employees over the weekend that was seen by Bloomberg. “So we need to rally hard to recover!”

The company’s Shanghai plant, which had slowed production in recent weeks amid severe Covid-19 restrictions, is returning to full strength and its Austin, Texas, facility is ramping up production as well, Musk said. Last week, he noted, Tesla’s Berlin factory built almost 1,000 cars, while its Fremont, California, plant notched a record day of production.

Musk often sends companywide emails near a quarter’s end to push staff to sprint to the finish, and Tesla is known to deliver many units in the the final weeks. In a subsequent memo, he told workers to be proud of the “great, real products” they make.

The emails of praise and encouragement are in stark contrast with internal messages the world’s richest man sent earlier this month warning of layoffs among salaried employees and his “super bad feeling” about the economy.

In the first three months of the year, the EV maker delivered 310,048 cars -- a quarterly record that came in above analysts forecasts -- as supply chain challenges were offset by accelerating EV adoption. Analysts are forecasting Tesla will deliver about 296,000 units this quarter, according to data compiled by Bloomberg.

Tesla’s shares fell 5% at 12:06 p.m. in New York amid a broad market decline. The stock had fallen 34% this year through Friday’s close, worse than the decline in the S&P 500.

Tesla makes the 3 and Y models, as well as the older Model S sedan and X crossover in Fremont, California. The Shanghai factory produces the 3 and Y models. Tesla also recently began delivering Model Ys from the newer plant in Berlin and has begun customers deliveries of the Y from Austin too.