Aside from what’s in Tesla’s quarterly shareholder letter and conference call, there’s good news and bad news this week about Tesla. First, production at the Gigafactory in Shanghai has restarted. Battery and motor production is up and running again, and vehicle assembly is being gradually increased, but it is unclear how long the factory’s inventory will last.
“We’ll have capacity gradually climbing over the next three to four days until a single shift is running at full capacity,” said Song Gang, senior director of manufacturing at Tesla Giga Shanghai, told CnEVPost. No cars have been built at the plant since the end of March.
On Good Friday, the Shanghai municipal government published a list of 666 companies that have been cleared to restart, including Tesla as well as other carmakers and important suppliers. The resumption of production is a so-called “closed-loop system,” much like the NBA utilized last season to keep its players isolated during the height of the pandemic. The workers will not leave the factory until at least the end of the month and will also sleep there. Workers are to be provided with sleeping bags and three free meals a day, as well as the equivalent of $63 more in wages per day, according to Gizmodo.
Tesla will also follow regulations to avoid the spread of Covid-19 by requiring employees to take a nuclei acid test once a day for the first three days, have their temperatures checked twice a day, and wash their hands four times a day. All companies wishing to resume operations in Shanghai had to submit detailed plans on how they’re going to stop the spread of Covid-19 at their workplaces to the local health authorities before they were given the go-ahead, according to the South China Morning Post.
Readers with no long-term memory problems may remember Elon Musk went ballistic and decided to move Tesla headquarters to Texas when health officials in Fremont made similar arrangements to protect people from Covid. The great and powerful Musk railed nonstop on Twitter about the US Constitution, government overreach, socialism, and several other things. Oddly, however, he has kept his mouth shut when Chinese officials imposed the current restrictions. Some might call that “situational ethics,” some might call it a smart business decision, and some might call it an act of cowardice. Your mileage may vary. See dealer for details.
To recap and wrap up the China portion of this story: Production at the Shanghai factory has been suspended since the end of March and it will take a while for cars to start rolling off the line at the pace they did before. Many suppliers were also hit with pandemic restrictions and are not in a position to start supplying essential parts to the factory right away. Tesla intends to run only one shift for the time, with a return to full production with two shifts a day not expected to resume until mid-May at the earliest.
Production In Germany Will Ramp Up Slowly
German news source Automiblwoche says Tesla will only produce about 30,000 vehicles in its new factory in Grünheide this year. At present, around 350 Model Ys are coming off the production line there each week. Tesla wants to increase production to 1,000 per week by the end of April, and begin a second shift by the end of June. But there are rumors that full production of 30,000 cars per month or more will not happen until next year.
ANP Management Consulting tells the German press one possible reason for the slower than expected production ramp is that Tesla has not yet hired enough staff. At present, only about 3,500 tradespeople are employed at the factory.
In the run-up to the start of production in March, there were already reports in other media that production in Grünheide this year would remain far below the capacity of 500,000 vehicles in the first expansion stage. The supply of parts is also an issue. The 2170 battery cells currently used for the Model Y come from Shanghai, as do the motors. Tesla is expecting the battery factory in Grünheide to begin producing 4680 battery cells later this year. At that time, the factory will be closed for 3 weeks to transition to building cars with the new format cells.
It appears that Tesla is experiencing another form of “production hell” at its German factory, but no one is betting Musk and his team won’t find a way to solve the teething issues that come with inaugurating any new factory. It may be a while before Tesla Model Ys built in Germany are available to many European customers, but that time is coming, and once it does, Tesla may very well dominate that market for years to come.