Chinese automaker BYD and other manufacturers are asking workers in Shenzhen facilities to work and live in the workplace until the end of this month, as the southern Chinese city sees new outbreaks of the omicron variant, local media reported. Chinese companies often keep employees in the so-called closed-loop system so they can produce even in cases of regional lockdowns. 

Why it matters: It remains to be seen whether the latest wave of the Covid-19 pandemic will again strain automakers in China, but this news shows the continued impact of Covid control measures on auto supply chains.

Details: BYD is one of the dozens of companies operating its Shenzhen factories under a closed-loop system that requires employees not to leave the plants for one week starting on July 24, financial media outlet Yicai reported on Monday (in Chinese).

  • Workers are confined in their workplace and must take one nucleic acid test daily. A BYD spokesperson told Chinese media Yicai on Tuesday that production is unaffected by the current outbreak.
  • BYD produces two popular electric vehicle models in Shenzhen, the Han sedan and Tang crossover, with a monthly capacity of around 30,000 vehicles. The car giant also has manufacturing sites in multiple cities, such as Changsha and Hefei, and projects its annual capacity to be more than 3 million vehicles this year.

Context: Other large tech companies in Shenzhen are doing the “closed-loop” system, including Huawei, ZTE, and drone maker DJI. Foxconn, a manufacturing partner of brands like Apple and Samsung, said that its Shenzhen facilities are under “normal” operation, Reuters reported on Tuesday.

  • BYD’s Shenzhen plants also stayed in a closed loop system for about a week in March, when China’s technology hub went into a two-week lockdown to contain the spread of Covid-19 infection. Shenzhen recorded 21 new Covid infections on July 24, including 13 asymptomatic cases.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen