Tesla’s Shanghai factory hit by temporary shutdown over coronavirus fears

As the Chinese authorities battle to contain the coronavirus outbreak, Tesla revealed on Monday, January 27 it has been ordered to suspend operations at its recently opened car factory in Shanghai.

The Shanghai government has ordered Tesla and all other private companies in the city to close their doors until February 9. Utility firms and companies related to healthcare are exempt from the order.

An online tracker set up by the Maryland-based Center for Systems Science and Engineering currently shows 101 confirmed cases of the coronavirus in Shanghai, and one death. Globally, as of Wednesday, January 29, there have been 7,783 confirmed cases globally — the vast majority of them in China — and 170 deaths, all on the Chinese mainland.

The Verge reported that in a call with investors this week, Tesla executives said the temporary shutdown of its Shanghai factory would likely delay production of its Model 3 there by about a week and a half, and may also have a slight impact on the electric-car maker’s profits for the first quarter of this year.

The suspension of operations comes just a few weeks after Tesla celebrated the delivery of its first batch of Shanghai-assembled Model 3 cars to customers in China.

Tesla has been taking orders for the Model 3 in China since October 2019. The Silicon Valley automaker led by billionaire entrepreneur Elon Musk already sells Model S and Model X electric cars in the country, though these models are currently manufactured at its Fremont plant in California before being shipped to Asia.

Producing the Model 3 locally marked a major step forward for Tesla, which is keen to make a big splash in the world’s largest new-car market. With that in mind, executives will certainly be hoping the shutdown doesn’t go beyond the currently set date of February 9.

Other automakers are suspending operations at their factories in Wuhan, where the coronavirus outbreak is believed to have started. The city has nine car factories, including those operated as part of joint ventures involving PSA Group, Renault, and Dongfeng — China’s third-largest automaker — as well as dozens of parts suppliers.

U.S. tech firms are also taking action in response to the coronavirus outbreak, with Google closing its offices in China, Hong Kong, and Taiwan for the time being, and placing restrictions on business travel in the region. Google’s China-based operation deals primarily with sales and engineering for its ad business as the company’s online services remain blocked in the country.

Apple, Facebook, and Microsoft are also taking similar action as they wait to see how the coronavirus outbreak develops.

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