Shortage of chips slowing production at Tesla, other manufacturers

Robert Besser
01 Mar 2021, 15:38 GMT+10

After a two-day shutdown due to parts shortages, Tesla's Fremont, California plant reopened on Wednesday.
Tesla stock dropped 8% on news of the shutdown.
Some workers were told they could take Wednesday and Thursday off.

FREMONT, California: After a two-day shutdown due to parts shortages, Tesla's Fremont, California plant reopened on Wednesday, Chief Executive Officer Elon Musk announced.

"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," Musk said in an employee email, according to electric vehicle news source Electrek.

Some workers were told they could take Wednesday and Thursday off, while the employee parking lots had fewer cars than usual on Thursday, according to sources.

The company also saw its shares dropping 8 percent during the day, after Bloomberg reported that the production of the Model 3, Tesla's less expensive sedan, had been temporarily suspended.

Electrek quoted Musk as telling employees that in the next few days, the production of the Model 3 and the Model Y small SUV would run at full strength and its more expensive Model S and Model X lines would also be accelerated.

However, company officials could not be reached for comments.

Several automakers, including General Motors Co, Volkswagen AG, and Ford Motor Co, have been hit by a shortage of chips, forcing them to scale down production.

"This is an industry-wide problem, rather than anything Tesla-specific. But this episode provides a very useful reminder that EV manufacturing is subject to periodic supply chain bottlenecks, whether related to chips, or batteries, or other components," Raymond James analyst Pavel Molchanov said by email.

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