Factory Shutdown Extended... Tesla's Lament

Complete Vehicle Manufacturers Face Parts Procurement Disruptions
Half of Sales Dependent on Chinese Production in Emergency

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Ji-eun] Sichuan Province in China has notified an extension of power outages until the 25th targeting production facilities using industrial electricity, causing disruptions in parts procurement for automakers such as Tesla and Toyota. In particular, since half of Tesla's total sales volume is produced in China, there are forecasts that future production volumes could sharply decline.

On the 21st, the Nihon Keizai Shimbun reported that Sichuan authorities notified 16,000 companies using industrial electricity on the 20th of an extension of the full production halt measure. Originally, Sichuan planned to maintain the power outage from the 15th to the 20th, but the measure was extended due to the ongoing power shortage.

The Nihon Keizai Shimbun predicted that if Tesla's production volume decreases due to this power outage measure, there is a high possibility that its global export plans will be disrupted. According to LMC Automotive, a global automotive industry market research firm, Tesla sold 290,000 vehicles in China, including exports, from January to June this year. The Tesla factory located in Shanghai serves not only China but also as a hub for exports to Europe, and vehicles produced there account for about half of Tesla's global sales volume.

Adding to the difficulties, the Chinese government’s three-month lockdown of Shanghai to prevent the spread of COVID-19 has also hindered smooth operations at the Shanghai automaker factories. The Nihon Keizai Shimbun reported that some of Tesla’s Supercharger stations in Sichuan and the nearby Chongqing area have suspended operations, causing user dissatisfaction to erupt.

This power outage incident was caused by the worst heatwave and drought on record this summer, which dried up rivers in Sichuan Province. Sichuan obtains 80% of its electricity from hydropower, but due to the drought, the Yangtze River water level dropped to its lowest, reducing power production by half.

This content was produced with the assistance of AI translation services.