Tesla plans two-week shutdown of Model 3 line amid global shortage of semiconductors


Tesla ‘plans two-week shutdown of Model 3 line and asks workers to forgo some pay’ as global semiconductor shortage squeezes car makers

  • Tesla will reportedly idle the Model 3 line in Fremont, California for two weeks
  • Company told workers they would not be paid for some of the days, source said
  • Tesla previously said that global semiconductor shortage creates challenges
  • Key plant in Texas believed to be Tesla supplier was knocked out by winter storm
  • Other carmakers including GM are shutting assembly lines due to chip shortage
  • Biden on Wednesday signed executive order aimed at chip supply crisis 

Tesla has told workers it will temporarily halt some production at its car assembly plant in California as it faces a semiconductor shortage, according to a new report.

Workers on a Model 3 sedan production line in Fremont were told their line would be down from February 22 until March 7, a person familiar with the matter told Bloomberg News.

The company advised workers that they would not be paid for February 28, and March 1-3, and urged them to take vacation time if they had it, the person said.  

The report did not clarify the reason for the halt, which Tesla CEO Elon Musk has not confirmed publicly, and Tesla did not immediately respond to an inquiry from DailyMail.com on Thursday.

However, Tesla said last month that it might face a temporary impact from a global semiconductor shortage, a widening crisis that has drawn executive action from President Joe Biden and boosted shares of chip-makers. 

Tesla has reportedly told workers it will temporarily halt some production at its car plant in California as it faces a semiconductor shortage. Telsa CEO Elon Musk has yet to comment

Other global automakers like General Motors are shutting assembly lines due to chip shortages, as consumer demand has snapped back unexpectedly quickly from the coronavirus crisis.

Chipmaker Samsung Electronics said last week that it had suspended its factory in Texas as a winter storm caused power outages. 

Samsung declined to identify its customers for the factory, but in 2019, Tesla said its self-driving chips are manufactured at Samsung’s factory in Texas.

It was unclear how much volume or revenue Tesla would lose due to the production halt. The Fremont plant has an annual production capacity of 500,000 Model 3s and Model Ys combined.

Tesla, which also has production facilities in China, said last month it may be able to grow its annual sale volume by more than 50 percent this year.

Tesla last week reduced the price of its cheaper variants of the Model 3 and the Model Y, the latest in a series of price cuts at a time when legacy automakers are trying to fight back with new models.

Workers on a Model 3 sedan production line in Fremont (above) were told their line would be down from February 22 until March 7, a person familiar with the matter said

Workers on a Model 3 sedan production line in Fremont (above) were told their line would be down from February 22 until March 7, a person familiar with the matter said

Shares of Tesla dropped as much as 5 percent on Wednesday following reports of the plant idling. 

Meanwhile, Ford said a lack of chips could cut the company’s production by up to 20 percent in the first quarter. General Motors said it was forced to cut output at factories in the United States, Canada and Mexico and would reassess production plans in mid-March.

U.S. semiconductor companies account for 47 percent of global chip sales, but only 12 percent of global manufacturing is done in the United States, according to the Semiconductor Industry Association.

Biden has been under pressure from Republican lawmakers to do more to protect American supply chains from China by investing in domestic manufacturing of next-generation semiconductor chips.

President Joe Biden signs an executive order on Wednesday aimed at addressing the global semiconductor chip shortage

President Joe Biden signs an executive order on Wednesday aimed at addressing the global semiconductor chip shortage

On Wednesday, Biden said he would seek $37 billion in funding for legislation to supercharge chip manufacturing in the United States as a shortfall of semiconductors has forced U.S. automakers and other manufacturers to cut production.

Biden also signed an executive order on Wednesday aimed at addressing the global semiconductor chip shortage that has alarmed the White House and members of Congress, administration officials said.

Under Biden’s order, the White House will look to diversify the country’s supply chain dependence for certain products, by developing domestic production and partnering with other countries in Asia and Latin America when it cannot produce products at home.  

Ford praised Biden’s plan on Wednesday and said in a statement that it was ‘incredibly important for our labor force, our customers and our business that we have a commitment to end this shortage as soon as possible.’  

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