KEY POINTS

  • Tesla's sales outlets in China are temporarily closed to stave-off the spread of nCoV
  • The company ordered the temporary shutdown of its Shanghai Gigafactory last week
  • Giga Shanghai is set to reopen February 10, but may be moved at a later date

Tesla's production and physical sales presence in China is close to zero with the company closing its Gigafactory Shanghai last week and on Thursday revealing it closed all its sales outlets starting February 2. The sole reason for both drastic moves: prevent the raging Novel coronavirus (2019-nCoV) outbreak sweeping mainland China from spreading among Tesla employees and customers.

Despite temporarily shutting down all 24 of its stores, Tesla is still accepting orders online for its MIC (Made in China) Model 3 all-electric four-door sedan currently being assembled at Tesla's Gigafactory Shanghai.

Tesla earlier announced Giga Shanghai will re-open for business on February 10, but there are rumors this date might be reset to a later one due to the mounting toll being inflicted by the Wuhan coronavirus.

As of Friday morning, Hong Kong time, China's National Health Commission reported 28,403 confirmed coronavirus cases and 567 deaths.

The temporary closure of Gigafactory Shanghai a month after it began ramping-up production of Model 3s is a big hit to Tesla, which is counting on sales in China to keep its growth going. Tesla only began delivering its first MIC Model 3s to Chinese customers in early January.

The delay in deliveries immediately ended Tesla's fantastic two-day run on Wall Street Monday and Tuesday when its stock skyrocketed an amazing 34 percent. Tesla shares leapt nearly 20 percent on Monday and by 13.7 percent on Tuesday. The Monday boost was the stock's biggest one-day jump since May, 2013.

Tuesday's closing price of $887.06 is a record high for the stock. The stock jumped by much as 23 percent Tuesday, hitting an intraday record of $968.99 per share. Tesla ended Tuesday with a market cap of $159.9 billion. Tesla's soaring stock has risen 400 percent since June 2019.

On Wednesday, the stock opened at $823.26 and closed at $734.70, an 11 percent loss. Analysts said if Tesla's stock fell more than 19.3 percent on Wednesday, it would have exceeded its largest single-day loss attained in 2012. This would have been its worst day on record.

The sudden Wall Street sell-off of Tesla's stock Wednesday was triggered by a statement from a Tesla executive at the company's Gigafactory Shanghai who said Tesla electric vehicles (EVs) initially scheduled for delivery in early February will be delayed due to the outbreak of 2019-nCoV.

Electric carmaker Tesla said it boosted deliveries of its most affordable vehicle, the Model 3, as it delivered a surprise profit in the past quarter Electric carmaker Tesla said it boosted deliveries of its most affordable vehicle, the Model 3, as it delivered a surprise profit in the past quarter Photo: AFP / JUNG Yeon-Je

“The proposed delivery (of cars) in early February will be delayed,” said Tao Lin, vice president of Tesla Global, in a statement posted on Chinese microblogging service Weibo. “We will catch up the production line once the outbreak situation gets better.”

Lin's statement echoes that of Tesla CFO Zach Kirkhorn who said during the company's earnings call last week Tesla expects “a one- to one-and-a-half-week delay in the ramp of Shanghai-built Model 3 due to a government-required factory shutdown” related to the raging coronavirus outbreak.

“This may slightly impact profitability for the quarter, but is limited, as the profit contribution from Model 3 Shanghai remains in the early stages,” he said. “We are also closely monitoring whether there will be interruptions in the supply chain for cars built in Fremont,” but Tesla so far is not aware of anything material.