Tesla Pauses Production in Shanghai

Matt Posky
by Matt Posky
tesla pauses production in shanghai

Tesla Inc. is briefly suspending production at its Shanghai factory for two days, starting today, as China upgrades restrictions pertaining to a new COVID outbreak. While the rest of the world has been scaling back pandemic-related restrictions, the Chinese Communist Party has begun issuing new mandates after locking down 51 million people at the start of the week. The government has said its part of its no-tolerance approach to the virus after citing roughly 1,700 infections spread across a dozen cities.

This has already started impacting supply chains that have been beleaguered by two years of restrictions already, apparently catching Tesla in the process. Despite Shanghai not having been issued any official orders, there’s been mounting pressure for businesses to temporarily shut down or reinstate protocols to have people work from home.

According to Reuters, Tesla only plans on having its facility idled until Friday. The outlet cited a notice from the factory, in addition to several unnamed sources asking not to be identified because they’re not authorized to speak publicly. But the general claims can be backed up by Chinese media confirming lockdowns in the northeastern province of Jilin, as well as in the cities of Shenzhen and Dongguan. Local authorities in other municipalities have opted to begin suspending transportation services and imposing travel restrictions, which Reuters‘ secret sources said made it impossible for many workers to commute to the factory.

Tesla’s Shanghai factory operates 24/7 and produces cars for the Chinese market. It also serves as an export point for vehicles heading to Germany and Japan. It delivered 56,515 vehicles in February, including 33,315 for export, according to the China Passenger Car Association. That works out to roughly 2,018 vehicles a day.

From Reuters:

Two people briefed on the notice said they understood it applied to Tesla’s general assembly lines. They declined to be identified because the information was not public.

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

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.

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. Apple supplier Foxconn was allowed to resume some operations at its Shenzhen campus on Wednesday after it set up such an arrangement.

Suppliers have reportedly already told the automaker that they’re only covered for about two days of downtime. Of course, plenty more manufacturers will be impacted if China’s latest round of lockdowns persists for longer than that. We’ve already seen numerous Japanese facilities having to ease off production to account for hiccups in Asian supply chains ahead of the new restrictions, with Toyota being the most recent. The situation clearly needs to be managed better. But the remedy shouldn’t come down to people having to live on the factory floor. If the principles Musk touts publicly are valid, he needs to prevent such labor abuses.

[Image: B.Zhou/Shuterstock]

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18 of 41 comments
  • Luke42 Luke42 on Mar 16, 2022

    China has COVID-19 Omicron lockdowns in Shenzhen, too. China successfully contained OG COVID, and has been making hay in terms of domestic propaganda about it ever since. Because of their aggressive approach, China held off the COVID waves longer than most. We're mostly-done with our Omicron BA.1 surge here in the US, and they're just getting started with Omicron in China. Hang on, the ride's not over yet. Like it or not, we live in a global economy, so it will affect us. Different plague-mitigation strategies, different consequences.

  • Kcflyer Kcflyer on Mar 17, 2022

    I predict the virus that originally escaped from a lab in China partially funded by the u.s. taxpayers will rear it's ugly head again just before the mid term elections. Then the mandates which suddenly went away will return (despite proof they didn't help) and of course we will need millions of absentee ballots. Anyone asking for proof that those ballots are legit will be branded a racist and if they dare posts on dem controlled sights like facebook or youtube they will be censored. Because youtube has standards that prevent people from questioning the integrity of the elections. But curiously you can find unlimited stories on youtube of people like Hillary Clinton or Al Gore and their supporters questioning the integrity of U.S. elections. Odd. Also curious that state media is not following the attempts of the FDA to slow roll the release of the Pfizer vaccine trials. They wanted 75 years to release the data. hmm So far since the judge ordered the FDA to release data we have learned that of the 38 deaths in the study slightly more than half were in the vaccinated group. I find that newsworthy.

    • See 15 previous
    • Jeff S Jeff S on Mar 18, 2022

      @Lou--Ronald Reagan would be considered a leftist in today's Republican Party. The Republicans have been taken over by extremists. The party is no longer the Republican Party but the Trump Party. The name should be changed especially since Trump likes to put his name on everything.

  • ToolGuy "At risk of oversimplification, a heat pump takes ambient air, compresses it, and then uses the condenser’s heat to warm up the air it just grabbed from outside."• This description seems fairly dramatically wrong to me.
  • SCE to AUX The UAW may win the battle, but it will lose the war.The mfrs will never agree to job protections, and production outsourcing will match any pay increases won by the union.With most US market cars not produced by Detroit, how many people really care about this strike?
  • El scotto My iPhone gets too hot while using the wireless charging in my BMW. One more line on why someone is a dumbazz list?
  • Buickman yeah, get Ron Fellows each time I get a Vette. screw Caddy.
  • Dusterdude The Detroit 2.5 did a big disservice by paying their CEO’s so generously ( overpaying them ) It is a valid talking point for for the union ) However , the bottom line - The percentage of workers in the private sector who have a defined benefit pension plan is almost non existent - and the reason being is it’s unaffordable ! . This is a a huge sticking point as to have lower tier workers join would be prohibitive ( aside from other high price demands being requested - ie >30% wage gain request ) . Do the math - can a company afford to pay employees for 35 years , followed by funding a pension for a further 30 years ?