Tesla, other automakers may continue suspension due to COVID-19 lockdown in Shanghai

Asian Tech Press (Apr. 15) -- All automakers in China, including Tesla, could continue to stop production in May due to COVID-19 lockdowns in Shanghai.

Statistics show that as of 12 p.m. on April 14, Shanghai reported a total of 15,284 confirmed local cases and 291,652 locally transmitted asymptomatic infections.

Multiple Chinese automakers have halted production during Shanghai's more than 10-day lockdown due to a worsening COVID-19 pandemic, raising concerns about the auto industry.

He Xiaopeng, chief executive officer and chairman of Chinese electric car maker XPeng Inc., said Thursday in his WeChat Moments, known as "Friends' circle", "If supply chain companies in and around Shanghai are unable to find a way to dynamically resume operations, all car plants in China may have to shut down and stop production in May."

"The good news is that some ministries and authorities are doing their best to coordinate," Xpeng CEO added.

His posting was echoed by Richard Yu Chengdong, CEO of Huawei Consumer BG and Intelligent Automotive Solution (IAS) Business Unit (BU).

In a post on his Friends' circle on Friday, Yu said, "If Shanghai continues to fail to resume work and production, all technology and industry firms involved in the supply chain in Shanghai will suspend production after May, especially in the automotive industry."

"Since mid-April, some companies have begun to stop production due to supply chain disruptions caused by COVID-19 lockdowns in Shanghai and other cities," Yu warned, adding that if it continues, "the economic loss or cost to the industry will be great!"

Tesla Inc. was among the automakers suffering from limits on production restrictions amid COVID-19 lockdowns.

The U.S. automaker has suspended production at its Shanghai plant since March 28, resulting in an output loss of over 40,000 units. The manufacturing center in Shanghai produces 10,000 Model Ys and 6,000 Model 3s a week, accordint to people familiar with the matter.

There was also news that Tesla's Shanghai gigafactory could resume operations in mid-May at the earliest. But sources in Tesla China denied it on Friday, adding to the uncertainty of resuming production in the financial hub.

While the latest news said that Tesla may resume operations at its Shanghai plant on April 18, having gotten approval from local authorities.

Along with Tesla, Volkswagen Group had to suspend production at its Shanghai plant earlier this month.

Shanghai-based EV upstart Nio Inc. announced on Saturday that it had to suspend complete vehicle production and delay deliveries, because the epidemic has disrupted its its suppliers around the country.

Regarding the shutdown crisis in the auto industry, Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers (CAAM), said in an interview, "It's not so absolute, only that there may be a large-scale production stoppage."

"However, if Shanghai and Jilin are unable to resume work and production for a long period of time, it will certainly have a negative impact on China's auto industry," Chen added.

An increasing number of Chinese entrepreneurs and economists have worried that the continuation of pandemic lockdown measured will have a significant negative impact on China's economy.

Beijing, however, takes a contrary view of such concerns. China's state-run Xinhua News Agency said in a report Thursday that the "dynamic COVID clearance" strategy will not affect the country's general economic trends.

The report stated, "Although people's lives may be affected locally in the short term, China's epidemic prevention and control policies can ensure normal production and life for the wider population, create a stable environment for overall economic and social development in the country, and will not change the general trend of steady improvement in the economy."

In response to industry concerns, Shanghai may be considering getting auto companies back to work as soon as possible.

A document from SAIC Motor Corp. shows that the group has set up a special working group to prepare for the resumption of work and production.

However, SAIC did not actually reveal a clear timetable for when it would resume operations.

You must be login to post a comment.