Tesla shuts down temporarily in Shenzhen

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Tesla’s not making any cars in China – at least for now.

On Monday we reported on new Chinese coronavirus lockdowns that are having a broad impact on national economy.

Yesterday, we reported on Tesla downgrading predictions due to materials costs and raising prices on existing cars.

This morning, we have a bombshell report from Reuters that Tesla’s “Gigafactory” in Shenzhen is actually closed down, and planned to remain shuttered for two days.

A report from Reuters shows that the facility generated just over 56,500 vehicles in February and accounts for a full 11% of Chinese exports.

Reuters reports Tesla workers are preparing to live in the factory in order to shelter in place.

Other contemporary reports also show the greater repercussions for the Chinese market.

“Economic loss may be real this time,” Citi analysts say, looking at the overall state of China’s economy as the nation doggedly follows a “zero-Covid” policy.

“We believe the omicron wave presents both risks and opportunities for China,” Bank of America Securities’ China equity strategy team said as quoted in the coverage.

By most accounts, the China response to covid right now is much more aggressive than most nation’s leadership would sign off on. However, according to some analysts close to the situation, there are reasons for the Chinese to be extra vigilant about covid.

“China is particularly vulnerable to the fast-spreading omicron variant,” writes Lily Kuo at Washington Post. “Although more than 85 percent of the population is vaccinated, Chinese vaccines have not proven to be as effective against the variant compared to the mRNA vaccines — like Pfizer and Moderna — used elsewhere, which are still under production and not yet available in the country. China’s large elderly population is especially at risk. More than 50 million people in the country above the age of 60 are not fully vaccinated, according to a briefing by the National Health Commission on Tuesday, raising worries that if the outbreak is not controlled China could suffer the same fate as neighboring Hong Kong where more than 4,500 have died — the vast majority elderly who weren’t fully vaccinated.”

In any case, watch Tesla and other affected stocks for more on how China’s policy shakes out.

 

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