Tesla factory in Shanghai struggles to reopen

Today, Tesla summoned workers to its Shanghai factory to prepare for reopening. Along with this company, two other automakers, SAIC Motor – Volkswagen’s Chinese partner, and General Motors also said they had begun testing plans to resume production at the same time.

Tesla originally planned to start a production shift on Monday. However, logistical bottlenecks continued as authorities in other cities had to shut down resulting in disruptions to ports and road transport. So they’re looking to roll out to Tuesday (April 19) because of a supplier logistics delay.

Similarly, an unnamed executive at a pharmaceutical company told Shanghai Securities News that it was unclear how they would be able to ship goods given the ongoing restrictions. “These are real problems that need to be addressed by policy,” this person said.

Last weekend, Chinese authorities announced a list of 666 companies prioritized to reopen or resume operations in Shanghai. Immediately, Tesla announced the plan to reopen to workers. To get around restrictions on residential areas in the city, the company issues a special endorsement to those upon request and arranges for a shuttle to take them back to the factory.

Only employees residing in the lowest-risk residential areas and those who have completed the two-shot regimen are allowed to re-enter. Along with about 400 employees who were present at the factory due to previous epidemic prevention measures, the company decided to organize a closed production.

Each worker will be provided with a sleeping bag and mattress. Due to the lack of any dormitories available, people will sleep on the floor in a designated area and there will be other spaces allotted for showering, entertaining (both unfinished) and catering.

All employees will be tested daily for the first three days, have their temperatures checked twice a day, and wash their hands four times a day, twice in the morning and twice in the afternoon. Workers will be provided with three meals and receive around 400 yuan ($63) a day. The actual amount will depend on the position and qualifications of each person.

The closed production plan is expected to last until May 1 and may change according to the city’s pandemic prevention policy. Before shutting down on March 28, Tesla workers in Shanghai worked three shifts 24 hours a day, seven days a week. Factory employees will work four days and have two days off after that. Now, they are required to work 12 hours a day, six consecutive days with one day off.

Tesla’s Shanghai plant produces about 2,100 vehicles per day, and shipped 182,174 vehicles in the last quarter. However, getting production back up and running after such a long shutdown will not be an instant process. According to sources of BloombergTesla had just over two weeks of inventory on hand based on a new closed schedule, and logistics was a big deal for many other departments.

The blockade of Shanghai and China’s broader anti-epidemic measures are taking a toll on the world’s number two economy. Authorities say ending community transmission is essential to ending the lockdown. Last month, Shenzhen allowed businesses to resume operations immediately after achieving the same status.

The city aims to prevent the spread of Covid-19 outside of quarantine areas by this Wednesday (April 20). Authorities decided to step up testing and transfer positive cases and patients’ relatives to isolation centers to meet that ambitious goal.

But Jin Dongyan, a virologist at the University of Hong Kong, said it would be difficult to hit the target because the Omicron variant could spread faster than Shanghai could identify by PCR testing. The city has performed more than 200 million PCR tests since March 10.

Session An (according to Bloomberg, Reuters)