Tesla to Pause Production at Berlin Factory Due to Supply Chain Problems

Tesla expects to stop production at its Giga Berlin factory, its largest in Europe, for two weeks at the end of January and early February, due to a lack of components as the Red Sea attacks on shipping have strained supply chains.  

“The considerably longer transportation times are creating a gap in the supply chains. Due to a lack of components, we are therefore forced to suspend vehicle production in the Gigafactory Berlin-Brandenburg,” Tesla said in a statement on Friday carried by The Wall Street Journal.

Tesla will suspend production of electric vehicles at its factory in Berlin between January 29 and February 12.

The incessant attacks from the Iran-backed Houthi rebels in Yemen on commercial shipping in the Red Sea have prompted many cargo owners and operators to divert traffic away from the Red Sea/Suez Canal route, a vital shipping lane for goods from Asia to Europe.

While there is an alternative route, via the Cape of Good Hope south of Africa, shipping times have increased significantly, and so will costs.

“Relying on so many key components from Asia, and specifically China, has been a potential weak spot in any automaker’s supply chain,” Sam Fiorani, vice president at AutoForecast Solutions, which tracks automotive supply chains and production, told Reuters, which first reported the halt in Tesla’s production in Berlin.

“Tesla relies heavily on China for battery components, which need to be transported to Europe through the Red Sea, putting production constantly at risk,” Fiorani added.

Other European automakers, including VW and Renault, are closely coordinating supply with shippers and are monitoring the situation, but they haven’t flagged yet significant production threats from the delays in the supply chains.

At the end of last year, furniture giant Ikea warned of delays in the supply of its products because of the Houthi attacks in the Red Sea. 

By Charles Kennedy for Oilprice.com

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