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Tesla faces another major challenge to address while it faces a major slowdown in sales amid recessionary conditions.
After launching its gigafactory earlier this year in Germany, electric carmaker Tesla (NASDAQ: TSLA) faces a major hurdle. The German road traffic agency has asked Tesla to recall Tesla models Y and 3 citing a software glitch. The agency said that 59,000 Tesla vehicles worldwide have a fault in an automatic emergency call. Last week, June 29, Germany’s KBA watchdog said that a software flaw resulted in the breakdown of the eCall. As per the design, the software calls emergency responders in cases of serious accidents.
As per KBA’s estimates, over 59,000 vehicles suffer this glitch globally. However, KBA has provided any exact numbers on the number of affected cars in Germany. This appears to be another major challenge brewing up for Tesla which is facing the pressure of declining sales.
Tesla Sales on a Decline
Last Saturday, July 2, Tesla reported the sales numbers for its second quarter of 2022. Tesla’s Chief Executive Officer Elon Musk said that the company delivered 17.9% fewer electric vehicles in Q2, over its previous quarter.
This happened as Tesla’s gigafactory in China remained closed for a longer time following the Covid-19 shutdowns in Shanghai. This majorly disrupted the company’s supply chain. As per Wedbush analyst Den Ives, more than 40% of Tesla’s sales come from China. Due to the shutdowns, the Shanghai factory produced fewer than 70,000 vehicles.
Last month, Elon Musk also pointed out issues with Chinese ports and the shortage of batteries. As a result, the company’s newly opened factories in Texas and Berlin are “losing billions of dollars”. Musk said:
“This is all going to get fixed real fast, but it requires a lot of attention, and it will take more effort to get this factory to high volume production than it took to build it in the first place.”
As the US economy goes through a period of a major slowdown, Tesla CEO Elon Musk has sounded the warning bell. Last month, Musk said that there could be possible layoffs owing to worsening economic conditions.
Tesla is reported;y considering laying off 10% of its workforce amid recessionary pressure. However, after receiving some flak, Musk said that he’s discussing the return of salaried workers to offices.