Exclusive-Tesla shuts down factory work in Shanghai for two days amid COVID curbs in China

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© Reuters. FILE PHOTO: A truck transports new Tesla cars at its factory in Shanghai, China May 13, 2021. REUTERS/Aly Song

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SHANGHAI (Reuters) – Electric vehicle giant Tesla (NASDAQ:) is suspending production at its Shanghai factory for two days, according to an internal and supplier-sent message as China tightens COVID restrictions to contain the country’s latest outbreak Checkers.

The Shanghai plant runs around the clock, and suppliers and Tesla personnel were told Wednesday in a Reuters report that production would be suspended for Wednesday and Thursday.

It gave no reason for the shutdown at the factory, otherwise known as the Gigafactory 3, which makes the Tesla Model 3 sedan and the Model Y crossover SUV.

Many cities across China, including Shanghai, have implemented strict movement controls to contain the country’s largest COVID-19 outbreak in two years. The measures have also led to factory closures in parts of the country, putting pressure on supply chains.

Tesla did not immediately comment.

The Shanghai plant produces cars for the Chinese market and is also a key export hub to Germany and Japan. According to the China Passenger Car Association, it delivered 56,515 vehicles in February, including 33,315 for export.

That equates to an average of 2,018 vehicles per day.

It was not immediately clear whether the work stoppage during the two days would also apply to other factory operations.

Two people who were aware of the message said they understand it applies to Tesla’s general assembly lines. They did not want to be identified because the information was not public.

The message did not specify whether the measures would correspond to a loss of production, or whether Tesla could make up for lost production.

Shanghai authorities have asked many residents not to leave their homes or workplaces for 48 hours to 14 days while conducting COVID testing or contact tracing.

In a separate Wednesday report, also seen by Reuters, Tesla asked suppliers to estimate how many workers would be needed to reach full production and to provide details on workers affected by COVID restrictions.

It also asked suppliers to prepare workers for living, sleeping and eating in the factories in an arrangement similar to China’s “closed-loop management” process. Apple (NASDAQ:) supplier Foxconn was allowed to resume some operations on its Shenzhen campus on Wednesday after making such an arrangement.

Tesla was warned by a supplier last weekend that its production had been affected by COVID measures, according to a person familiar with the matter. That supplier told Tesla its supplies could only last two days, the person said.

Any prolonged lockdown in China will further rattle Asian supply chains, OCBC economist Wellian Wiranto said in a research paper, noting that Shenzhen’s southern manufacturing center alone produces 11% of China’s exports.

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