Shanghai will lock down the city in two phases starting Monday as a large-scale investigation is conducted to deal with the rapid spread of the new crown. The Shanghai government said all businesses and factories would suspend production or work remotely during the lockdown. Production at Tesla’s Shanghai plant will be suspended for at least a day due to the restrictions, people familiar with the matter said, adding that Tesla has not notified workers whether it will extend the shutdown beyond Monday. Tesla did not immediately respond to a request for comment.
In 2021, the Shanghai plant, the first factory outside the U.S. to produce half of Tesla’s electric vehicles, had to stop production for two days earlier in March for the same reason. At the time, Tesla was “doing its best” to ensure the factory could continue production, while “actively cooperating with government-ordered coronavirus testing and related epidemic prevention measures.”
The Shanghai factory is crucial to Tesla considering that China is Tesla’s second-largest market, and the electric cars produced at the Shanghai factory are also exported to Europe and other parts of Asia. The China Passenger Vehicle Market Information Association released a report in early March saying that in February alone, Tesla delivered 56,515 electric vehicles through its Shanghai plant, including 23,200 for the domestic market and 33,315 for export.
The sweeping restrictions come as China is experiencing its worst spread of the coronavirus since the first outbreak in Wuhan, with 5,550 local infections reported across the country on Saturday. The government locked down the tech hub of Shenzhen in the south earlier in March, while Jilin province, which borders Russia in the north, also imposed strict lockdown measures, with the provincial capital, Changchun, locked down on March 11 and the entire province locked down a few days later. Changchun is China’s auto manufacturing hub, and like Tesla, Toyota and Volkswagen Group’s factories in Jilin province were closed for weeks due to the lockdown.
The lockdowns in Shenzhen and now Shanghai, two of China’s most economically important cities, demonstrate the growing cost and challenge of maintaining a zero-tolerance approach to the virus as it deals with more spreading variants of the virus. While most countries have begun coexisting with the coronavirus, China is maintaining a strategy of partial lockdowns, mandatory quarantines and mass testing. For more news, stay tuned for follow-up reports. (Source: bloomberg Compilation: Kishi.W)