Tesla closed its Fremont plant to a shortage in parts

Elon Mush-led Tesla is the world’s largest manufacturer of electric vehicles and has been busy with its recent venture into the Indian market. but with his recent Tweet the company’s CEO, Elon Musk stated that the company’s Fremont, California plant will be shut down for two days this week due to “parts shortages” and had reopened on Wednesday.

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According to sources, Tesla’s shares fell 8% during the day after the production of Tesla’s less expensive sedan, the Model 3, had been temporarily suspended. The main reason was the shortage of parts.

We have already seen the reports that the shortage of supply of chips has plagued the automakers. It is the very reason why manufacturers like General Motors, Volkswagen, and Ford, have been forced to scale down production.

“We are experiencing some parts supply issues, so we took the opportunity to bring Fremont down for a few days to do equipment upgrades and maintenance.”

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The CEO also stated that the company was scaling up production of its more expensive Model S and Model X lines, soon going back to two shifts.

However, the global semiconductor shortage has severely hit the company, which produces the highest number of Electric vehicles in a year.

“This is an industrywide problem rather than anything Tesla-specific. But this episode provides a handy reminder that EV manufacturing is subject to periodic supply chain bottlenecks, whether related to chips, or batteries, or other components.”

Samsung Electronics had suspended its factory in Austin, Texas as a winter storm caused power outages. The Tesla chips are made in the Texas factory of Samsung. As such, this has directly impacted Tesla’s EV manufacturing plants.

The Fremont plant has an annual production capacity of 500,000 Model 3s and Model Ys combined. So the financial impact of halting the production at such an important plant could very well cause Tesla a huge load sum of money.

Source

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