Employees work at the Tesla Gigafactory in Shanghai, east China, November 20, 2020. US electric car company Tesla built its first Gigafactory outside of the United States in the new Lingang area in 2019, with an annual production capacity designed of 500,000 units.
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Tesla reduced vehicle production at its Shanghai plant this week due to parts shortages caused in part by a supplier’s covid blockade.
According to Junheng Li, CEO and research director of JL Warren Capital, a covid case detected at an Aptiv factory in Shanghai’s Jiading district led to the authorities temporarily closing that facility. Aptiv makes a wiring harness used in Tesla’s electric battery crossover, Model Y, at that plant.
Tesla has therefore temporarily closed some of its production lines for Model Y at its Gigafactory in Shanghai, JL Warren researchers confirmed.
Reuters first reported on the production problems at the Tesla in Shanghai.
Last week, Chinese President Xi Jinping held a meeting with the country’s top leaders in which he stressed that China should stick to its “zero-Covid dynamic” policy. He called on the country to rally behind the decisions of the Chinese Communist Party’s central committee and to “fight resolutely” against all questioning of virus control policies.
Li of JL Warren said, “This statement sets a mandate for all local authorities to prioritize zero-Covid over regional economies. So carmakers are planning day after day, week after week.” His company expects parts shortages, supply chain problems and production stoppages to recur in the near future. JL Warren Capital specializes in market research of companies operating in China, with over 200 consultants in the field.
Covid blockades also had a dramatic impact on Tesla’s manufacturing in China last month.
According to the numbers of the China Passenger Car Association out Tuesday, Tesla sold 1,512 Chinese-made electric vehicles in the country in April, a drop of more than 95% from the previous month. It produced around 10,757 electric cars under its Shanghai plans in April, but did not export any to Europe or Asia beyond mainland China as it had done in previous months.
In the first four months of 2022, Tesla sold 183,686 of its Chinese-made electric vehicles, CPCA estimate, 73,874 of which it exported out of the country.
Tesla CEO Elon Musk said in an interview on Tuesday interview with the Financial Times“I’ve had some conversations with the Chinese government over the past few days and it’s clear that the lockdowns are being lifted quickly, so I don’t expect this to be a significant issue in the coming weeks.”
During a first-quarter earnings call last month, Tesla CFO Zachary Kirkhorn said, “We have lost about a month of construction volume from our Shanghai factory due to Covid-related closures. Production is resuming at limited levels and we are working to get back to full production as quickly as possible. This will impact the total volume of construction and delivery in the second quarter. “
Aptiv and Tesla did not respond to requests for comment on CPCA numbers or manufacturing problems in China.