Tesla halted EV production in Shanghai due to chip shortage

Shanghai's Giga Press installed in Shanghai. Source: Tesla

Tesla has reportedly halted production of electric cars in Shanghai in August due to the global semiconductor shortage.

The chip shortage is affecting numerous industries and was identified as the main limiting factor for further growth by Tesla CEO and co-founder Elon Musk at the company Q2 2021 earnings call.

“For the rest of this year, our growth rates will be determined by the slowest part in our supply chain, which is the wide range of chips that are at various times the slowest parts in the supply chain,” he said at the time.

Now, Bloomberg has reported that Tesla’s Shanghai factory, which has hitherto been pumping out thousands of Model 3 and Model Ys a week, was forced to close for four days in August because of a shortage of key chips.

The agency reported that people familiar with the matter said a shortage of electronic control units caused large delays in producing the Model Y.

Tesla’s growth story in 2020 was phenomenal. From January 1 2020 to September 1 2020 when it implemented a five-to-one stock split, its value skyrocketed by a massive 500%.

Its value in 2021 has not experienced the same intensity of confidence. While the EV maker has started to ramp its Model Y in China and also sell them in Europe, it is still completing construction of the Berlin and Texas factories.

Once completed, these will enable it to commence making Model Ys in Europe as well as production of the Cybertruck.

With the release of fully-featured Full Self-Driving delayed as the company irons out kinks, and an AI “Teslabot” now also on the EV maker’s development schedule there is bound to be some hesitation as the EV maker finds its feet in never-before-explored territory.

These factors are undoubtedly underlying a lacklustre year so far for Tesla in so far as stock valuations go.

But Tesla is not the only electric vehicle maker that is experiencing difficulties in the global chip shortage picture.

Reuters reported on Wednesday that Nio, a Chinese EV maker that counts Baillie Gifford as its largest shareholder and is betting on swappable batteries as its unique selling point, is also facing challenges.

Nio has cut its sales forecast from 23,000-25,000 to 22,500 to 23,500 for the third quarter after it saw a drop in deliveries from 7,931 in July to 5,880 in August, Bloomberg reported.

Ford, Honda, General Motors and Volkswagen have also been forced to idle or curtail production due to the chip shortage.

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