Report: Tesla Giga Shanghai Pauses Production

According to media reports, it might affect the monthly production result by several thousand cars.

Tesla Giga Shanghai: Exterior (Tesla Q4 2021 report)

Mark Kane

By: Mark Kane

Mar 16, 2022 at 11:06am ET

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The Tesla Giga Shanghai plant in China is Tesla's crucial manufacturing site, which allowed the company to significantly increase production, but it might need a short break.

According to *Reuters'*s unofficial sources, the company is suspending production for two days. The reason appears to be related to China's tightened COVID restrictions in the area, but it's not confirmed yet.

"Electric vehicle giant Tesla (TSLA.O) is suspending production at its Shanghai factory for two days, according to a notice sent internally and to suppliers, as China tightens COVID restrictions to curb the country's latest outbreak."

Reuters notes that a single day of production is worth about 2,000 Made-in-China (MIC) Tesla Model 3 or Tesla Model Y cars, so a two-day break would be roughly 4,000 cars.

It's not the end of the world, as it's not even 10% of the monthly volume, which expanded by 27% year-over-year to some 56,515 units in February.

However, there is no guarantee that the issue will be solved within just two days and it comes on top of all other issues with parts supply, semiconductors shortage, nickel price increase, inflation, and more.

Anyway, we would not worry about Tesla's production progress much, as the company is almost ready with an official launch of two new large EV plants - one in Germany and one in Texas - which both will produce the Tesla Model Y.

With the new plants online, the manufacturer will have the potential for further growth, while geographical diversification should help to navigate through the supply chain issues.

The current situation is difficult for the entire industry. For reference, many other manufacturers had to slow down car production (EV and ICE) or even pause production of some plants, mostly due to supply challenges.

What do you think?

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On the demand side, it seems that most of the electric cars available on the market note significantly higher demand than production, which results in long waiting times (in months or even over a year), as well as an increase in prices.

Hopefully, things will start to improve, because otherwise, electrification will progress far slower than it could.