Tesla Halts Production at Shanghai Plant. Here’s Why?

May 10, 2022

The latest in a string of setbacks for Tesla’s Shanghai facility is the company’s inability to secure parts for its electric vehicles, according to an internal memo seen by Reuters.

According to the memo, the plant plans to make less than 200 cars on Tuesday. This is much less than the 1,200 cars it has been making each day since it reopened on April 19 after being closed for 22 days.

Two people who knew about the situation said earlier that the factory had to stop making things on Monday because of supply problems.

Shanghai is in its sixth week of a Covid-19 lockdown that is getting worse. This has tested the ability of manufacturers to work when people and materials can’t move around freely.

Tesla planned as late as last week to get production back to where it was before the lockdown by next week.

People who asked not to be named because production plans are private said it was not clear when the current supply problems would be fixed.

When asked for a comment, Tesla didn’t answer right away.

China Passenger Car Association will report Tesla’s April sales on Tuesday. Tesla is China’s second-largest electric vehicle (EV) maker after BYD.

Last week, another auto association said that it thought that total sales of cars in China dropped by 48 percent in April because zero-Covid lockdowns shut down factories, cut down on traffic to showrooms, and slowed down spending.

Two people with knowledge of the situation told Reuters on Monday that Aptiv, Tesla’s main supplier of wire harnesses, stopped shipping from a plant in Shanghai that supplies both Tesla and General Motors Co after workers there were found to have Covid-19 infections.

The Gigafactory 3 is the name of Tesla’s plant in Shanghai, where the Model 3 sedan and Model Y crossover is made for the Chinese market and for export.

After being closed for 22 days because of the Covid-19 lockdown in Shanghai, Tesla’s plant there started making some cars again on April 19.

Reuters said that Tesla had planned to start making 2,600 cars a day at its Shanghai plant on May 16.

Shanghai’s citywide lockdown, which was put in place more than a month ago and affects all 25 million people, has been tightened. This could make it harder for people to move around for the rest of the month.

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