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Thursday’s spectacle of Elon Musk’s attempt to buy Twitter for about $43 billion has diverted attention from a significant Tesla production snag in China.
Bloomberg reports that Tesla Giga Shanghai, a factory operated by Tesla, Inc. in Shanghai, China, which produces Model 3 and Model Y vehicles, has had production lines shuttered for nearly three weeks due to city-wide lockdowns to control the spread of COVID-19. Since Mar. 28, the factory has lost 39,900 units, equating to about 2,100 units per day. There is no word on when production would restart, though some believe it could be sometime in the first half of May.
“Our base case estimate for reopening is the first week in May,” Junheng Li, founder and CEO of JL Warren Capital, a China-focused equity firm, told Bloomberg.
Li estimated that Tesla’s Shanghai factory could record a production loss of 84,000 units under this scenario. She said losses could be even more significant if surrounding regions were locked down, impeding the flow of auto parts to the factory. Upon reopening, the factory would restart production in stages and could take time to resume full capacity, depending on the supply of components.
In the first quarter, the factory produced 182,174 vehicles. The current loss of 39,900 units is about a 20% drop in output versus 1Q figures. Li’s more severe scenario of 84,000 units would equate to a 46% drop in production. “Since the production lines first fired up in late 2019, this most recent production hiatus has been the longest — worse than when Covid first hit in 2020 and much worse than the odd chip shortage that has forced two- or three-day suspensions in past months,” Bloomberg said. Li added that Beijing’s Zero COVID policies may cause “multinationals to rethink their strategies in China … As long as […]
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