Following a three-week shutdown, Tesla Inc.'s (NASDAQ:TSLA) Giga Shanghai could possibly resume operations sooner rather than later.
What Happened: Tesla is preparing to restart production at its Giga Shanghai on Monday, Reuters reported, citing people familiar with the matter.
The EV giant was forced to shutter operations at the Giga Shanghai on March 28 to fall in line with the local government's dictate to control the spread of COVID-19. Local authorities have reportedly given the go-ahead for the resumption, although the final call will depend on how the COVID-19 situation shapes up.
Tesla will presumably test the waters by running a single shift and then gradually ramps up.
The COVID-19 production disruption seen since last month is the longest since the factory began functioning in late 2019, impacting more than 50,000 units of output, Reuters said.
Meanwhile, responding to rumors that Giga Shanghai might remain shuttered till mid-May, Tesla China VP Grace Tao said on social media platform Weibo these are nothing but rumors and the company is working on identifying the source of information, Teslarati reported, sharing a screengrab of the Weibo post.
Related Link: How Tesla Stock Can Be Overvalued And Substantially Undervalued At the Same Time
Why It's Important: China is one of the key markets for Tesla as it strives to preserve and grow its market share amid intensifying competition from nimble startups and legacy automakers. The Giga Shanghai has also served as a major export base for the company. The Model Y vehicles sold in Europe were thus far exported out of China.
The Giga Shanghai provides a margin advantage to Tesla, as cars produced from this factory have higher margins due to the cheap labor. Now that Tesla has two more Gigas up and running, some of the slack could be picked by the new Gigas in Berlin and Texas.
Chinese EV stalwart Nio Inc - ADR (NYSE:NIO) announced last weekend it is suspending operations at its Hefei manufacturing plant. Reports, naming a company insider, suggests the company has gradually resumed production.
Related Link: Why Cathie Wood Says Nio, Xpeng Could Be Immune To Chinese Regulatory Crackdown
Photo: Courtesy Tesla Inc.
