Tesla, Inc.'s (NASDAQ: TSLA) production at its Giga Shanghai is close to returning to full potential, according to a report.
What Happened: Weekly output at Tesla's Giga Shanghai plant has returned to nearly 70% of pre-lockdown levels, Reuters reported, citing people familiar with the matter.
According to reports, the company began running a second shift last week, increasing the output to around 2,000 units per day. After a 22-day shutdown due to lockdowns imposed by the local administration, Tesla reopened with a single shift under a closed-loop production system on April 19.
The Shanghai city administration has been very cooperative, but Tesla had to contend with many challenges, including insufficient manpower and logistical issues that affected component supplies, the Reuters report said.
With Shanghai looking to lift the city-wide lockdown that has been in place for about two months, authorities will likely cancel many restrictions for businesses to facilitate full resumption on Wednesday.
Output at Giga Shanghai will likely even further in the coming weeks, the report said.
Related Link: Latest On Production Resumption at Apple (NASDAQ:AAPL), Tesla Supplier's Shanghai Plants
Why It's Important: Giga Shanghai is a vital cog in Tesla's growth story. Apart from supporting the company with considerable volume, the factory also gives a margin lift. Giga-Shanghai-produced cars carry a higher margin due to the cheap labor available in the country.
Worried about a slow ramp-up at Giga Shanghai, many Tesla bulls recently lowered their price targets for Tesla stock.
Tesla stock closed Friday's session 7.33% higher at $759.63, according to Benzinga Pro data.
Photo via Wikimedia Commons
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Read at Benzinga