Tesla is reportedly known to shut down its China factory in Shanghai once again. It is said that the factory has issues with getting vehicle components. The locality has been having a lockdown and restrictions have halted various manufacturing segments throughout the country. It is reported by Reuters that the work was halted also due to supply shortages.
It was only last year that Tesla was known to have tackled the semiconductor shortage issue effectively. In addition to the expected challenges, the lockdown seems to have affected Tesla China’s production. The city officials reintroduced the lockdown and strict measures to control the spread of COVID-19 in March. It was when the Tesla factory had to be shut down for two weeks. After two weeks, the factory was open with employees living in the factory and the production rate was not 100%. Despite the closed-loop system being recommended, the need of bringing components and other requirements had to be met.
There has been a decline in the number of vehicles they are producing. The company was making less than 200 vehicles, much lower than its original capacity of making 1,200 vehicles per day. By mid-May, the automaker planned to have 2,600 cars manufactured every day. However, now the plans go haywire due to supply issues.
Now it remains unclear how Tesla is going to work on it, and how quickly it is going to act on it. According to the China Passenger Car Association (CPCA), the automaker’s sales in the country has gone down by 98 percent in the month of April. In April Tesla Shanghai was producing 10,757 vehicles while the sales were just 1,512 units. In March the factory-made 55,462 vehicles and sold 65,814 units. In addition to this, Tesla did not export any vehicles in April as well.
Evidently, not just the production but also sales have been impacted. In the first quarter, Tesla was able to sell 310,000 vehicles which is a record. Despite Elon Musk stating it was a difficult quarter, the numbers appeared good. Compared to Tesla China’s rivals, BYD and SAIC-GM- Wuling the sales of electric vehicles and plug-in vehicles have risen by 50%. Overall passenger car sales in the country dropped by 36%, according to CPCA.
Shanghai continues to have another intensifying lockdown. It appears that the restrictions will continue for some time. They have already tested out the ability to manufacture with certain limitations, however now as the materials are all used, there is a need to halt the production completely.