Tesla (TSLA) Shanghai Gigafactory Remains Closed

Tesla (NASDAQ: TSLA) says now that it does not expect to be able to restart production at Gigafactory Shanghai until at least Friday. Last week, a city-wide lockdown was issued as COVID cases surged in the area. Tesla was scheduled to restart production last weekend; however, the company reportedly could not secure enough workers and suppliers.

The company attempted again to restart production Monday but notified workers through an internal memo that the factory would remain closed. The Giga Shanghai’s shutdown has stretched out to at least 12 days, a substantial amount of time that could adversely affect the company’s vehicle production and delivery numbers this second quarter. Last year alone, Gigafactory Shanghai accounted for about half of Tesla’s vehicle production and deliveries.

Economist Eric Zhu told Bloomberg that “Shanghai’s lockdown has dealt a blow to China’s economy. But an out-of-control outbreak would lead to an even worse outcome. Choosing lockdowns - despite their growing costs - suggests China is not yet ready to take an alternative Covid exit path,”

With a record number of cases, Shanghai has become the epicenter of the country’s Covid outbreak, which is considered the worst that China has faced since the pandemic began.

By Michael Elkins

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