Tesla boss Elon Musk asked the electric car maker’s employees to step up their efforts after supply chain issues contributed to a “very tough quarter” for the company, according to a leaked email to staffers.

Musk referenced production issues at Tesla’s factory in Shanghai – where operations halted for weeks due to renewed COVID-19 lockdowns in China. Tesla’s current quarter ends on June 30.

“This has been a very tough quarter, primarily due to supply chain and production challenges in China, so we need to rally hard to recover!” Musk said in the leaked message.

Musk added Tesla’s Shanghai facility is “returning to full strength” and its factory in Austin, Texas is “spooling up.” He also noted that the plant in Fremont, California achieved “a new all-time production day last week,” while the factory near Berlin produced nearly 1,000 cars.

Electrek was first to report on the email.

Tesla factory
Tesla shares have been under pressure in recent weeks.
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Tesla did not immediately return a request for comment. Musk dissolved the company’s media relations team in 2020.

Tesla shares were down nearly 5% in trading Monday during a major selloff in the broader market. The company’s decline outpaced the Nasdaq’s losses of about 4%.

The COVID-19 lockdowns in China added to existing supply chain difficulties for Tesla, which, like other companies, has struggled to obtain necessary parts and materials in recent months.

The Shanghai factory resumed production in mid-April after a three-week pause that caused Tesla to product more than 50,000 less vehicles than expected at the plant, Reuters reported.

Employees at the facility temporarily worked within a “closed-loop” system that required them to sleep on the factory floor, according to multiple reports.

In May, Musk told the Financial Times that he did not expect long-term difficulties related to COVID-19 lockdowns.

‘I’ve had some conversations with the Chinese government in recent days, and it’s clear that the lockdowns are being lifted rapidly, so I would not expect this to be a significant issue in the coming weeks,” Musk said at the time.

The lockdowns were just one source of pressure on Tesla’s operations this quarter.

Earlier this month, Musk warned Tesla employees that he had a “super bad feeling” about the state of the US economy and said the company would “pause all hiring worldwide.” The billionaire also indicated that Tesla could lay off about 10% of its salaried workforce.

Musk’s long-delayed effort to buy Twitter has also weighed on Tesla shares, which plunged in recent days as he sold some of his stake in electric car marker to fund his $44 billion takeover bid.

The Twitter deal is currently on hold due to Musk’s concerns about the number of bots within the company’s user base.



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