Tesla to pause production at GigaShanghai amid Covid-19 infections surge in China

Written by Cláudio Afonso | info@claudio-afonso.com

Tesla’s GigaShanghai will pause production from March 28 to April 5 due to city-wide lockdown announced by the Chinese Government. The measure represents the biggest city-wide lockdown since the Covid outbreak began in early 2020.

“The measure aims to curb the spread of COVID-19, protect people’s life safety and health as well as achieve the dynamic zero-COVID-19 target at the social level as soon as possible,” the city’s coronavirus prevention work leaders’ office announced.

Production will be halted on Monday but Tesla hasn’t yet informed employees whether it will extend the suspension beyond Monday, Bloomberg reported citing people not authorized to speak publicly.

Shanghai will be under partial lockdown after reporting more than 10,000 asymptomatic Covid cases over last 8 days testing all the residents for Covid between March 28 to April 5. Shanghai and Jilin have been the areas hardest hit by the outbreak, which took off in early March. “We will optimize and adjust epidemic prevention measures according to the epidemic situation.” — the Government stated. Check all the measures here.

Tesla said recently that it was doing its best to avoid production suspension at its Shanghai factory while it cooperates with China’s COVID-19 prevention measures. “We are actively cooperating with the government’s requirements for nucleic acid testing and other epidemic prevention requirements, and at the same time are doing our best to ensure production, overcoming difficulties together,” Tesla China noted.

Chinese measures

“In order to curb the spread of the epidemic, ensure the safety of the people’s lives and physical health, and achieve zero social dynamics as soon as possible, based on the previous rounds of nucleic acid screenings and after expert evaluation and judgment, the municipal Leading Group for the Prevention and Control of the new crown pneumonia Epidemic researched and decided to carry out a new round of diced and meshed nucleic acid screenings throughout the city. The relevant matters are hereby notified as follows.

  1. Starting from 5 o’clock on March 28th, nucleic acid screening will be implemented in batches in the city bounded by the Huangpu River. In the first batch, Pudong, Punan and adjacent areas were the first to implement containment control, nucleic acid screening was carried out, and the blockade was lifted at 5:00 on April 1. At the same time, key areas in Puxi area continue to implement closure and control management. In the second batch, starting from 3:00 on April 1st, in accordance with the principle of pressing stubble promotion, the Puxi area will be sealed and controlled, nucleic acid screening will be carried out, and the seal will be lifted at 3:00 on April 5th.
  2. In the closed-controlled area, the residential area implements closed management. All personnel do not leave the house, and only personnel and vehicles cannot enter or exit. Take-out, express delivery, etc. that are necessary to ensure basic life shall be delivered without contact, and shall not be allowed to enter residential areas.
  3. In the closed-controlled area, all enterprises shall implement closed production or work from home, except for public service enterprises such as water, electricity, fuel, gas, communications, transportation, sanitation, grain, oil, meat and vegetable supply, etc. that guarantee the lives of citizens and the basic operation of the city.”

Tesla sold 59,845 Chinese-made cars in January. Tesla produces Model 3 sedan and Model Y sports multifunctional cars in Shanghai, and sold 70,847 Chinese-made cars in December. The Tesla Model Y topped China’s premium SUV segment in 2021 with approximately 169,853 units sold from January to December last year.


Jefferies analyst Philippe Houchois has raised Tesla’s Full Year 2022 and 2023 Earnings estimates by 7-9% due to recent price hikes and higher free cash flow. However, the Analyst lowered Tesla’s price target from $1,400 to $1,250 to reflect higher inflation and due to “a 50bps increase in assumed cost of capital”.

Recently, after Elon Musk warned for the “recent inflation pressure in raw materials & logistics”, Tesla raised the prices of all its models in the U.S. and on Model Y, Model 3 in China. After these price increases, Model 3 Performance costs now $78,440, Model Y Performance $85,440, Model S Plaid $158,440, and Model X Plaid $162,440 — all of these prices are for the fully optioned version. Comparing Year-over-Year, Model X Long Range was the model with the highest price increase, from $89,990 to $114,990 — 28%

Written by Cláudio Afonso | info@claudio-afonso.com