Tesla postpones Shanghai production restart on Monday

In an internal notice, Tesla has notified its workers and suppliers that production at its Shanghai Gigafactory will not resume on Monday as hoped.  

Earlier, the company had plans to resume production on Monday. They expected to see their first batch of workers being released from a lockdown Shanghai imposed to combat rising Covid-19 cases.  

With the Monday plan being scrapped, the company neither elaborated on the reason nor given a new date for resuming activity.  

Tesla Postpones Shanghai Production

The city initiated its lockdown in two phases, with the first phase starting on 28 March and continuing till 1 April. The second phase will be from 1-5 April. While the first phase was initiated on the eastern side, the second phase will cover the western side. 

The production at the factory came to a halt on day one of the two-phase lockdowns, as it lies in the east of the city’s Huangpu River. The Shanghai unit of Tesla, called Tesla Giga Shanghai or Gigafactory 3,produces cars for the China market and is a crucial export hub.  

The initial plan was to suspend production for four days but canceled production plans for Friday and Saturday. This was after the authorities tightened restrictions on movement in the eastern half of the city.  

Currently, the entire city is under lockdown. This is the longest suspension since the factory started production in late 2019.  

The unit produces 6,000 Model 3 and 10,000 Model Y cars per week. On Saturday, Musk tweeted that this was a difficult quarter because of supply chain interruptions and China’s zero-COVID policy.  

The city has been facing a new rise in infections for almost a month. To avoid destabilizing the economy and bringing down the infected numbers, the city has locked 25 million people.  

During the two phases of lockdown, public transport will be suspended, and firms and factories will halt operations or work remotely. Over the nine days of lockdown, the authorities will carry out Covid-19 testing. The authorities asked the people to cooperate through social media.  

Unlike other lockdowns in China, where there was freedom of mobility within a region, Shanghai will not have that because of its high population density, making it the largest city to face a complete lockdown. 

The parts of the city under lockdown resemble ghost towns and is a piece of bad news for a city that is the financial hub of the second-largest economy. That will reduce the popularity of China’s zero-Covid strategy, which is swift lockdowns and aggressive restrictions to contain an outbreak. But harsh policy against milder variants has led to questioning the strategy in the first place. There is a rising discontent against the lockdowns and testing while the rest of the world is on its way out of the pandemic. 

Even though these might be the condition of their largest manufacturing unit, the stocks of Tesla were up in pre-market trading on Monday. This was caused when the company released new record delivery numbers this weekend. Its Q1 2022 delivery and production results show that it beat its all-time delivery record with 310,000 EVs in a challenging quarter.  

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