Tesla has reportedly halted production at its Gigafactory Shanghai due to shortages in its overseas supply chains. The impact from an extended worldwide shutdown are extending to its China operations that until now have mostly avoided the ripple effects of the COVID-19 pandemic. Tesla did not respond to request for a comment.
Why it matters: Shanghai was once Tesla’s only car plant remaining in operation amid the coronavirus outbreak in late March. However, it has not been spared as the shutdowns continue to impact its local operations and parts suppliers.
- Tesla currently relies heavily on global supplies for the Model 3 sedans it produced in China. Around 70% of car components on the made-in-China Model 3 come from abroad. The company expects production to be completely localized by the end of this year.
Details: Operations have ground to a halt starting on May 1. No new cars are expected to come off the final assembly line until this Saturday, Chinese media reported Thursday citing people familiar with the matter.
- The Shanghai factory was temporarily shut down first due to the five-day Labor Day holiday from May 1 to May 5, but it remained unopened when the national holiday ended Tuesday.
- At least part of the reason was due to a widespread disruption in the automotive supply chains caused by an extended shutdown in the North America, according to the report.
- Most components for locally-built Model 3 sedans, including battery cells produced by Panasonic in Tesla’s Nevada operation, are currently sourced from overseas suppliers.
Context: As sales in China have been going up, Tesla is progressively ramping up production. According to its Q1 2020 report last week, it is upgrading production goal for the local plant by a third to 4,000 Model 3s per week, or 200,000 per year.
- Speaking with Chinese media later that week, Tao Lin, Tesla’s vice president of external affairs confirmed that Shanghai expansion is progressing with locally-made Model Y expected to go on sale next year.
- Electrek reported the new facilities will enable local production of battery modules and electric motors.
- The US EV giant is reportedly planning to resume operation in its Fremont plant, after shutting it down on March 23.