Tesla said on Thursday that it was doing its best to keep the production in Giga Shanghai in China going. The challenge comes as Chine faces the COIVD-19 outbreak and tightens measures to curb it. The automaker had to halt production for two days as a result, however, it is trying to keep up the production going.
“We are actively cooperating with the government’s requirements for nucleic acid testing and other epidemic prevention requirements, and at the same time are doing our best to ensure production, overcoming difficulties together,” the company said in a statement sent to Reuters.
Last year, to limit the spread of the virus the country has strict containment plans including mass testing and isolation. In less than three months into 2022, China has more cases than last year’s total cases in the country. And the number of new cases is also hitting high, similar to the first wave of the virus in 2020. With this, the lockdowns are triggered in various locations, including mass testing to limit the spread. As the situation is getting tough, Tesla announced on Wednesday that they will be shutting down the factory for two days.
Stated, “Electric vehicle giant Tesla is suspending production at its Shanghai factory for two days, according to a notice sent internally and to suppliers, as China tightens COVID restrictions to curb the country’s latest outbreak.” Further added, “The Shanghai factory runs around the clock, and suppliers and Tesla staff were told on Wednesday in the notice, reviewed by Reuters, that production would be suspended for Wednesday and Thursday.”
Challenges
The ramp was already going well. The factory only broke ground a little over a year ago, and Model 3 deliveries started in January. Tesla announced on the same Q4 call that Shanghai already has a yearly capacity of 150,000 cars. This was expected to push back progress a bit in January. But the factory was running till now, and the situation seems to be unpredictable.
“It feels like using the COVID-19 outbreak example does have a little bit of merit to it,” Munster said in a discussion with Andrew Murphy. “But the real substance is China reminding the world who is the boss when it comes to manufacturing.”
Munster cited the severe power outages in China last year due to high demand and soaring energy prices, which led to widespread production halt and further squeezed the already messed up global supply chains. The analysts said China had done an incredible job leveraging the supply-chain power in recent months and at the same time, balanced that with relationships with major global players such as Apple and Tesla.
