SHANGHAI, (Reuters) – Production at Tesla Inc (NASDAQ:) is expected to drop by more than a third in the current quarter compared to the first three months. This was due to China’s zero COVID lockdowns causing deeper disruptions to production than Elon Musk predicted.

According to a memo from Reuters, the U.S. automaker aims to produce more than 71,000 cars at its Shanghai facility in June.

According to China Passenger Car Association data, it would produce around 115,000.00 units during the second quarter.

According to the CPCA, Tesla Shanghai produced 178,887 vehicles in the first three months.

Tesla didn’t immediately reply to my request for comment Thursday.

Musk, CEO of the company said that second-quarter vehicle production in Shanghai would be roughly on par with first quarter.

He added, “It’s possible we may pull out a rabbit and be slightly higher.”

Musk has warned about recession risks in recent times. According to news site Electrek, Musk warned the company about the possibility of a recession. He said that the quarter would be intense because Shanghai’s COVID regulations were “a great challenge”. The plant had just returned to normal production on Thursday.

In an email to Tesla executives, he stated that last week he was feeling “super bad” about America’s economy. He felt the need to lay off about 10 percent of his employees and to freeze employment.

He sent a follow-up email to his employees, saying that Tesla was “overstaffed” in several areas and that Tesla will reduce its salaried workforce by 10%. He then retweeted that he had predicted an increase in total company headcount over the next twelve months.

Analysts cautioned Tesla that the 33% gross margin in its first quarter was not likely to continue due to higher commodity prices and the Shanghai lockdown.

Tesla shares have dropped by nearly a third in the past year.

Tesla was able to increase its weekly output to 90% with Shanghai’s COVID restrictions being relaxed, according to sources familiar with the matter. The plant was shut down by the Chinese government for 22 days.

According to people familiar with the situation, the original goal of electric car manufacturer was to increase daily production to 2600 units per day by mid-May, but this wasn’t possible due to the fact that the matter is confidential.

Factory has operated since April under closed-loop management, which required that workers sleep close to the production lines.

According to Reuters, Tesla plans to make 17,000 Tesla cars per week starting June 13. The company also intends to close the closed loop system and let workers commute between home and work.

Model 3s and Model Ys can be purchased in China from the Shanghai plant. They are also available for export to other markets, including Europe and Australia.

Based on data from China Passenger Car Association and Reuters calculations, Tesla sold around half the 936,000 units it shipped globally last year.

Australia customers now must wait 9-12 months before they can get their Model 3s. Customers from Europe, however, will be able to pick their vehicles up in the first quarter of the year.

According to the website, Chinese buyers can expect to wait between 10 and 24 months for Tesla-made cars.