Tesla has announced the temporary closure of its Shanghai factory due to the ongoing situation in China with the deadly Coronavirus. The infection has already claimed the lives of over 170 people in the world’s most populous nation.
The Chinese government has already moved to prevent the further spread of the Coronavirus in the country, and this will impact on Tesla, as the electric car manufacturer closes its Shanghai plant. The decision will delay the production of the Tesla Model 3, and put further downward pressure on the company’s first-quarter profits.
Tesla had declared $105 million in net income, with revenue of $7.38 billion, in the fourth quarter of 2019. But the cessation of Model 3 production will impact on Tesla, and likely result in reduced earnings when its latest financial figures are released.
Although automakers have also made moves to shut down production in China, with both Ford and Toyota stating that they will temporarily idle Chinese assembly plants for an extra week. With thousands of Chinese people having contracted the potentially lethal virus, the Chinese government has no choice other than to take extreme measures, including closing down transit and factories throughout the nation.
Google has also indicated that it will close all Chinese locations for at least a couple of weeks, while another major technology firm, Apple, has also informed investors that its Chinese suppliers Foxconn will be closed until February 10. And Starbucks has temporarily shuttered over 2,000 of its stores in China.
Commenting on the issue, Chief Financial Officer of Tesla, Zack Kirkhorn, stated that the company is still attempting to understand the implications of the Coronavirus, but expects a delay of 10 days in the production of the Model 3. Meanwhile, Tesla continues to monitor whether the issue in China will cause delays in the supply chain for its vehicles manufactured in Fremont.
Deliveries of Model 3 vehicles began in early January, approximately one year after Tesla made the decision to begin construction of its first facility outside of the United States.
As China attempts to come to terms with the ongoing situation with the Coronavirus, a variety of well-known corporate names have been forced to take extraordinary actions. Restaurant chains such as McDonald’s, KFC, and Pizza Hut have been forced to close thousands of stores across China, with major airlines including British Airways, American Airlines, and United all decreasing flights to and from mainland China.
Disney was even forced to completely close parks located in Shanghai and Hong Kong, as the deadly virus continues to cast a shadow over life in China.
Tesla CEO, Elon Musk, revealed recently that the company also intends to manufacture its low-price SUV, the Model Y, at its new facility in Shanghai. There is no word from Tesla that the Coronavirus will delay this process, but everyone involved with the electric car manufacturer will be monitoring the situation closely.