Tesla production lags in Shanghai due to parts shortages, Covid restrictions


Employees work at the Tesla Gigafactory in Shanghai, east China, November 20, 2020. The American electric car company Tesla built its first Gigafactory outside the United States in 2019 in the new Lingang area, with a designed annual production capacity of 500,000 units.

Ding Ting | Xinhua Press Agency | Getty Images

Tesla cut car production at its Shanghai factory this week amid parts shortages caused in part by a supplier’s Covid lockdown.

According to JL Warren Capital CEO and Research Director Junheng Li, a Covid case discovered at an Aptiv factory in Shanghai’s Jiading district led authorities to temporarily close that facility. At that factory, Aptiv makes a wiring harness that is used in Tesla’s electric battery crossover, the Model Y.

Tesla then temporarily shut down some of its Model Y production lines at its Shanghai Gigafactory, JL Warren researchers confirmed.

Reuters first reported on the production problems at Tesla in Shanghai.

Last week, Chinese President Xi Jinping met with the country’s top leaders, where he stressed that China must adhere to its “dynamic zero-covid” 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 doubts about its virus containment policy.

JL Warren’s Li said: “This statement set the mandate for all local authorities to prioritize zero-Covid over regional economies. So automakers are planning day by day, week by week.” Her company expects parts shortages, supply chain problems and production downtimes to return in the near future. JL Warren Capital specializes in market research for companies operating in China, with more than 200 consultants on site.

Covid lockdowns also dramatically affected Tesla’s manufacturing in China last month.

According to figures released Tuesday from the China Passenger Car Association, Tesla sold 1,512 Chinese-made electric vehicles in the country in April, down more than 95% from the previous month. It produced an estimated 10,757 electric cars at its Shanghai plant in April, but did not export any to Europe or points in Asia outside mainland China, as it had done in previous months.

In the first four months of 2022, Tesla sold 183,686 of its China-made electric vehicles, CPCA estimates, of which 73,874 exported out of the country.

Tesla CEO Elon Musk said in an interview with the Financial Times on Tuesday: “I’ve had some conversations with the Chinese government over the past few days and it’s clear that the lockdowns will be lifted soon, so I wouldn’t expect this to be a major issue. problem in the coming weeks.”

During a Q1 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 shutdowns. Production is resuming at a limited level, and we are working to get back to full production as soon as possible, which will impact the overall build and delivery volume in the second quarter.”

Aptiv and Tesla did not respond to requests for comment on the CPCA numbers or manufacturing issues in China.

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