Tesla Halts Production At Shanghai Factory, Amid Covid Outbreak

Tesla has suspended production at its Shanghai factory for two days, as China tightens restrictions in response to a worrying Covid-19 outbreak.

Reuters reported that Tesla informed its staff of the production halt in an internal notice that also was sent to Tesla suppliers in the region.

Last month Tesla was reportedly going to double double its production capacity in China with a new factory in Shanghai, amid growing demand.

Shanghai factories

The new plant will be located in the vicinity of its existing production base in Lingang, Pudong New Area.

Tesla it should be remembered had become the first foreign carmaker to operate a wholly owned factory in China with its Shanghai plant, which opened in 2019.

Tesla actually started production at its Shanghai plant, also known as the Gigafactory 3, less than a year after breaking ground.

The plant makes the Tesla Model 3 sedan and the Model Y, and was used to build 500,000 cars per year, but expansion plans for Gigafactory 3 could see production this year at that factory ramp up to 1 million EVs a year.

But once the new factory in Shanghai is constructed and fully operational, Tesla will have the capacity to produce up to 2 million cars per year Reuters reported, citing people who asked not to be identified in discussing still-private plans.

Production suspension

It should be noted that the current Shanghai factory runs around the clock, and suppliers and Tesla staff were told on Wednesday in the notice, reviewed by Reuters, that production would be suspended for Wednesday and Thursday.

It did not give a reason for the stoppage at Gigafactory 3, but it comes as many cities in China, including Shanghai, have been rolling out strict movement controls to stem the country’s largest Covid-19 outbreak in two years.

The measures have also caused factory shutdowns in parts of the country, putting pressure on supply chains.

Indeed, authorities in Shanghai have asked many residents not to leave their homes or work places for 48 hours to as long as 14 days as they conduct Covid tests or carry out contact tracing.

Tesla did not have immediate comment.

In a separate notice issued on Wednesday that was also seen by Reuters, Tesla asked suppliers to estimate how many workers were needed to achieve full production and to provide details of workers affected by Covid restrictions.

It also asked suppliers to prepare workers to live, sleep and eat at the factories in an arrangement similar to China’s “closed-loop management” process.