Tesla Closes Shanghai Gigafactory for Two Days as Covid Cases Spike in China

Tesla Closes Shanghai Gigafactory for Two Days as Covid Cases Spike in China

Tesla’s Shanghai Gigafactory has been shut down for two days due to an increase of Omicron instances in China, which has forced the authorities to tighten regulations. The carmaker informed staff and suppliers of the shutdown on Wednesday, according to Reuters, which obtained a copy of the internal message.

The cause for the manufacturing halt on Wednesday and Thursday was not revealed by the electric car manufacturer. However, the manufacturing halt comes as Toyota and Volkswagen, the world’s two largest manufacturers, halted operations in China this week owing to a local spike in COVID-19 cases and extra regulatory limitations imposed to deal with the surge.

Tesla Closes Shanghai Gigafactory for Two Days as Covid Cases Spike in China

It’s also probable that supply chain issues had a role in the shutdown’s cause. The factory’s 24-hour operation is critical to Tesla’s worldwide operations — and its financial line. A considerable amount of Model 3 and Model Y automobiles are exported to Europe from Tesla’s Shanghai Gigafactory, which is the company’s largest by volume. Because the facility produces around 2,000 vehicles each day, even a two-day outage would significantly diminish Tesla’s output and cause more delays.

In China, the virus is resurgent, with instances in the first three months of this year exceeding the total number of cases in 2021. The number of new cases reported on a daily basis has begun to rise to levels not seen since the epidemic began in March 2020. To stop the spread of the epidemic, the Chinese government has mandated widespread testing and isolation.

(Reuters) – SHANGHAI, March 16 – According to a notification emailed internally and to suppliers, Tesla (TSLA.O) is pausing production at its Shanghai facility for two days as China tightens COVID regulations to combat the country’s newest epidemic. The Shanghai facility operates 24 hours a day, seven days a week, and suppliers and Tesla employees were notified on Wednesday in a notification seen by Reuters that production will be halted on Wednesday and Thursday.

It did not specify why the plant, also known as the Gigafactory 3, which produces the Tesla Model 3 sedan and Model Y crossover sport utility vehicle, was shut down. To combat the country’s greatest COVID-19 epidemic in two years, many cities throughout China, including Shanghai, have implemented severe mobility limitations. In other sections of the country, the policies have resulted in plant closures, placing strain on supply networks.