Tesla, the massive electric vehicle company, has reportedly suspended production at its Shanghai-based plant due to rising cases of COVID-19. According to a notice sent out to its workers and suppliers, the suspension comes in the wake of the government’s recent COVID restrictions.
The new restrictions are meant to assist in curbing the spread of the virus. The factory currently operates 24/7 and produces 2,000 units per day. Fortunately, the company notice stated that the company would only shut down production for forty-eight hours.
The factory is known as Gigafactory 3, where the Tesla Model Y crossover sports utility vehicle and Tesla Model 3 sedan are produced for exclusive use in the China market.
The factory also acts as a crucial supply hub for Japanese and German EV markets. In February, it delivered 33,315 units for export and 56,515 units for domestic use which translates to an average of about 2,018 units every twenty-four hours.
Most cities in the country, including Shanghai, have re-introduced strict movement controls for their residents.
The ruling class in Shanghai has requested its residents to remain at home or their places of work for the next forty-eight hours. In some areas, the residents will have to remain indoors for up to fourteen days as they test for COVID-19 and perform contact tracing.
Tesla issued a separate notice to its suppliers on Wednesday, March 16, seeking to know the number of workers they would need to attain full production. The notice also asked the suppliers to estimate the number of workers likely to be affected by the restrictions.
The company further beseeched its suppliers to prepare the workers to begin eating, sleeping, and living at the factories. It’s an arrangement whose implementation would look similar to the “closed-loop management” technique widely used in China.
Foxconn, the supplier for Apple products, was given the green light to resume its operations at the Shenzhen campus on the same day. The authorization came after it had successfully implemented a similar living arrangement for its workers.
According to Wellian Wiranto, an OCBC economist, any prolonged China lockdowns will further rattle the supply chains in Asia. Wellian added that Shenzhen, the southern manufacturing center, accounts for up to 11 percent of all Chinese exports.
This comes in the heels of China recording more positive cases in the past few months than it did the entire past year. Authorities have begun conducting mass testing in all major cities with the hope of curbing new infections.