(Bloomberg) —
Last week, Elon Musk hosted a massive party at Tesla’s new plant in Austin, Texas for 15,000 people. The factory, which serves as Tesla’s new corporate headquarters, is the crown jewel of the company’s growing global operations.
My colleague Sean O’Kane got access to what Tesla called the Cyber Rodeo, which doubled as a recruiting event. “Weaving through the heavy machinery, art installations, and the beer and wine stands (where IDs were checked), local engineering students stared in awe at cutaways of the Model Y and stacks of the new 4680 battery cells,” he wrote.
While all eyes have been on Austin, I am wondering about what’s going on in Shanghai. Tesla’s plant outside the city has been dark since March 28, when the region’s strict Covid-19 lockdown began. It’s not clear when it will reopen. Roughly 25 million people are still subject to tight movement restrictions that keep them in their homes. Access to food has become a real issue.
Tesla’s China plant, which makes the Model 3 and the Model Y, is widely seen as being more efficient than the company’s factory in Fremont, California. With China offline and Austin and Berlin just beginning operations, a big number to watch this quarter will be Tesla’s production figure. Tesla made 305,000 vehicles in the fourth quarter globally.
The Shanghai plant, which opened in late 2019, was Tesla’s first factory abroad, and it was built in record time. The government-run Xinhua News Agency reported that it had taken Tesla just 168 working days, about six months, to go from permits to hooking up the electricity to the brand new plant. The Model 3 was the first car produced in China from a factory that is wholly owned by a foreign company, making it a rare showcase of global cooperation.
”We aim to increase our production as quickly as we can, not only through ramping production at new factories in Austin and Berlin, but also by maximizing output from our established factories in Fremont and Shanghai,” Tesla said in its last earnings report. “We believe competitiveness in the EV market will be determined by the ability to add capacity across the supply chain and ramp production.”
Now one of its major plants is offline. And ramping production back up from a shutdown isn’t an instant process.
Tesla has weathered supply chain issues — from the chip shortage to backups at ports — better than most automakers. And opening plants in Berlin and Austin lessens the company’s dependence on Shanghai, which continues to be Tesla’s main export hub. Tesla reports earnings on April 20: put Shanghai on your bingo card.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
