Tesla is having to delay some made-in-China Model 3 deliveries planned for this month due to the coronavirus outbreak, which is forcing Tesla to temporarily shut down Gigafactory Shanghai.
The global death toll of the coronavirus has risen to almost 500, and the confirmed cases have now reached more than 24,000 in mainland China alone.
In order to limit the spread, the country is limiting travel and shutting down factories where the virus could spread.
It is affecting the electric vehicle industry, which is booming in China both as a consumer market and as a producer of electric vehicles and parts for the global market.
Last week, Tesla chief financial officer Zach Kirkhorn mentioned that the automaker is in the “early stages of understanding if and to what extent” the coronavirus is going to affect them:
At this point, we’re expecting a 1 to 1.5 week delay in the ramp of Shanghai built Model 3 due to a government required factory shutdown. This may slightly impact profitability for the quarter, but is limited as the profit contribution from Model 3 Shanghai remains in the early stages. We are also closely monitoring whether there will be interruptions in the supply chain for cars built in Fremont. So far we’re not aware of anything material, but it’s important to caveat that this is an evolving story. However, we have more than sufficient cash to continue our expansion plans, while further strengthening the balance sheet.
Now Tao Lin, a vice president at Tesla China, confirmed that it is leading to delays in planned deliveries of made-in-China Model 3 vehicles for February:
The planned deliveries in early February will be delayed. We will catch up the production line once the outbreak situation gets better.
He didn’t specify how many Model 3 deliveries are going to be affected.
During its Q4 2019 earnings report, Tesla announced that they are already achieving the planned annualized production rate of 150,000 Model 3 vehicles at Gigafactory Shanghai.
In the grand scheme of things, I doubt it’s going to have a major impact, but it is a setback for the quick production ramp of Gigafactory Shanghai.
I don’t know the extent of the restrictions of factory operations under the forced shutdown, but if they are allowed a certain number of workers in the factory, maybe Tesla could use this time to do some upgrades.
Just a thought.
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