According to various reports, Tesla will shut down the factory in China. This time it isn’t about the spread of COVID, but to update the equipment within the factory. While some media outlets state that the shutdown will be a couple of weeks, some say that it will be for some days. It remains unclear when and how many days the shutdown will be.
As investors are noting the changes in the production numbers of Tesla. Giga Shanghai’s shutdown is duly noted. This is more than twice what the factory will be shut down this year. The shutting down has already lowered production numbers of the Tesla factory in Shanghai.
However, regular plant shutdowns are common for companies. Currently, the factory is running at a lower capacity than during the pre-COVID-19 outbreak this year. The local lockdowns have affected other businesses in Shanghai as well. In the first quarter of this year, Tesla delivered 310,000 vehicles and the numbers are expected to rise up to 350,000 units in the second quarter. However, as another shutdown is expected, the number is now lowered to 250,000 to 323,000 units, according to Factset. At around July 2, the second-quarter results are to be out.
Updating Model Y production line
According to Teslarati, an image of a memo from Tesla China seemed to indicate that Giga Shanghai’s shutdown will only last for a few days, from July 1 to 4, 2022. However, Reuters, citing an internal memo from the electric vehicle maker, noted in a report that the shutdown would instead last two weeks.
In the memo, it is stated as “In order to cooperate with the production upgrade of the super factory, the entire factory (including the workshop and office area) needs to be powered off from July 1st to July 4th.” Furthermore, the rules are regulations have been stated. “Office employees on daily shifts: Arrange annual leave/sabbatical leave, work from home, or work at an off-site office location, such as RDC/TC, according to actual work needs.”
After the upgrade, the U.S. automaker aims to boost the plant’s output to a new record high by the end of July. It will get closer to producing 22,000 cars per week in Shanghai, according to the memo. A two-month-long COVID lockdown in Shanghai delayed Tesla’s plan. It was to reach the production of 8,000 Model 3s and 14,000 Model Ys by mid-May. Now the Shanghai plan is running with 17,000 units, combining both Model 3 and Model Y production.