Leading electric vehicle maker Tesla reported last July 2nd that its sales for the year’s second quarter were down by almost 18% compared to its performance over the previous quarter.

Tesla sold around 255,000 vehicles between April and June. Meanwhile, the company rolled out 259,000 vehicles throughout the same period, 15% less than its output in the first quarter.

This is the first time since 2020 that Tesla’s sales and production performance have fallen short compared to the previous quarter. The decline in sales was also caused by extensive lockdowns and shelter-in-place orders issued following the initial outbreak of the pandemic.

To be fair, these slumps in sales and production are quite rare where Tesla is concerned. Despite the recent drop, both sales and production figures are up from where they were at the same time last year.

Overall company production was also up by 25%. Deliveries, on the other hand, increased by around 27%.

Lockdowns Take Their Toll

One of the primary reasons for the drop in sales and production is China’s hard-line zero-COVID policy, which imposed a lockdown on Shanghai, where one of Tesla’s most prolific factories is located.

The lockdown aimed to combat a surge in COVID cases caused by the Omicron variant shuttered businesses and kept residents home for nearly the entire month of April.

According to Wedbush Securities technology analyst Dan Ives, the Shanghai lockdown is estimated to have decreased Tesla’s overall quarterly production by around 70,000 vehicles.

Although the Chinese government has since lifted the lockdown, Tesla’s facility in the country has had issues getting parts from other suppliers both in the country and overseas.

Staying Optimistic

The recent slump has done little to dampen optimism over at Tesla.

According to a recent company statement, its top management believes that the issues faced by the company in the first half of the year are now well behind it. Indeed, despite both lockdowns and the current supply chain crisis, Tesla reports that it hit its highest production rate in June of this year.

It may be recalled that, in the earlier part of the second quarter, Tesla opened its production facilities in Germany and Texas. However, company CEO Elon Musk expressed concerns that output from these plants remains distressingly minimal and that there have been issues concerning ramping up production. This adverse development has done little to help the EV mogul’s effort to keep his company out of bankruptcy.