This is undoubtedly news that will relieve Tesla (TSLA) – Get the Tesla Inc report rivals because it thwarts the electric vehicle maker’s plans to increase its market share. Its CEO Elon Musk seemed to have the pawns lined up well to keep Tesla’s rivals in the highly lucrative electric vehicle market at bay.
Tesla has officially started delivering vehicles from its new factory near Berlin, Germany. The group is payable to open its fourth production facility in Austin, Texas on April 7. And in addition, Tesla succeeded forge agreements with producers of nickel, a key metal in the development of batteries.
These agreements notably allow the company to better manage its supply chain at a time when there is a great imbalance between supply and demand for raw materials, the prices of which soared after the Russian invasion of Ukraine. . Russia is a major nickel producer.
But all this beautiful building is somewhat creaking. Indeed, Tesla has just informed its employees and suppliers that its Shanghai factory in China will remain closed.
Shanghai plant remains closed
In a memo, Musk’s company told employees in China on Sunday that they should stay home as government restriction measures in Shanghai to limit Covid-19 infections remained in place. Tesla also asked its employees to continue to respect and follow the rules within their communities.
This decision dashed the hopes raised by a report by Reuters who had announced earlier that Tesla intended to reopen this factory which produces 6,000 Model 3 sedans per week and 10,000 Model Y SUVs.
Reuters said the US automaker aims to resume production on Monday April 4 as it expects to see its first batch of workers released from a city-imposed lockdown to tackle a rise in Covid-19 cases. .
Production has been halted at Tesla’s Shanghai factory since March 28.
Shanghai is at the center of a new surge in Covid-19 cases in China, with more than 8,000 new Covid infections reported in the city on Saturday, including 7,788 asymptomatic infections.
China has locked down Shanghai, its biggest city, to carry out Covid-19 tests. Shanghai authorities said they would divide the city in two for the tests, using the Huangpu River which runs through the city as the border. The eastern part of the city, where Tesla’s factory is located, remained tightly closed.
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Tesla hoped the restrictions would only last a few days but they appear to be dragging on, which has forced the group to repeatedly postpone the reopening of this factory which serves both local and international markets – Asia and Europe.
“It was an *unusually* difficult quarter due to supply chain disruptions and China’s zero Covid policy,” Elon Musk said in a tweet on Saturday, despite the company delivering a record number of vehicles in the first quarter.
Big impact on Tesla production
Tesla delivered a record 310,048 new cars in the three months ending March, the company said, up 67.8% from a year ago.
However, production actually fell to 305,407 vehicles from 305,840 in the last three months of last year, partly thanks to supply chain disruptions and Covid-related closures at its Shanghai plant.
The Austin-based company firm production at the Shanghai factory last month for two days on March 16 as the government tightened restrictions due to a rise in Covid omicron cases. He reopened it but closed it again on March 28.
The direct consequence is that consumers who hoped to receive their vehicle soon will still have to wait. In addition, it reduces the inventory of vehicles available, which is likely to create an imbalance between supply and demand, ultimately creating a price spike.
The company hopes to be able to satisfy this high demand with production in four factories, but the temporary closures in Shanghai make this objective difficult.
Tesla’s Shanghai factory, which opened in January 2020, produced 56,515 electric vehicles in February, including 33,315 for export, according to official data. The factory, which is Tesla’s largest production site, is being ramped up to eventually produce 1 million electric vehicles each year.
Tesla is expected to deliver more than 1.42 million vehicles this year, industry sources expect.