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Summary
- Tesla CEO Elon Musk said that its Fremont plant was shut for two days and had re-opened on Wednesday due to parts shortage.
- Despite the temporary halt, Musk said operations would run at full capacity over the next few days.
- The global semiconductor shortage led to several other car companies to scale down their EV production targets.
US-based electric car giant Tesla (NASDAQ: TSLA) had temporarily halted production at its Fremont, California plant for two days this week due to shortage of essential parts. Tesla CEO Elon Musk tweeted that the plant was re-opened on Wednesday, 24 February.
The temporary halt raised concerns about the availability of sufficient supplies for smooth production. However, Musk said the plant is expected to operate at full production capacity for the Model 3 and Model Y in the next few day.
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Tesla CFO Zachary Kirkhorn said that the Model S and Model X vehicles would experience some bottlenecks in Q1 due to the revamp, however, it could see a rise in deliveries owing to higher manufacturing capacity in China for the Model Y.
Want to know more? Do read: Tesla (NASDAQ:TSLA) Competing With Fast-Growing China Based EVs
Moreover, Musk has also hinted that the revamped Model S and X vehicles would see a rise in production and strong demand. The company plans to increase its vehicle delivery by 50 per cent in 2021 from the almost 500,000 vehicles (Model 3 and Model Y) delivered in 2020, according to a report in The Wall Street Journal.
On Thursday, Musk said that Nickel availability was a primary concern for scaling up production of their lithium-ion cells. He added the company was shifting from Li-ion to iron cathodes for their standard range vehicles. Nickel is an important component for lithium-ion battery production.
Global chip shortage
The global semiconductor shortage is a market-wide challenge within the automotive sector and has similarly impacted other car manufacturers. Auto giants such as General Motors (NYSE:GM), Ford (NYSE:F) and others too announced scaling down their EV production due to the shortage.
Want to know more? Do read: How global chip shortage is denting auto production plans
The industry wide chip shortage led to carmakers Ford and General Motors to lose at least 33 per cent of its earnings, according to Bloomberg.
Ford CEO Jim Farley said that the US should start mass manufacturing of EV batteries to avoid this in the future. According to consulting company AlixPartners, the shortage will slash global automotive industry revenues by US $60.6 billion this year.
Stock Performance
Tesla’s (NASDAQ:TSLA) stock prices closed at US $682.22, down by 8.06 per cent as of 25 February following the news. The stock fell by a further 2.08 per cent to USD 668.00, in after hours trading.
