The automotive industry in Shanghai has been seriously affected by the Covid-19 lockdown. Shanghai delivered 2.83 million vehicles in 2021, or 10.7% of the nationwide output. Jilin in northeastern China – which recently has also been affected by a Covid-19 outbreak – assembled 2.42 million units last year, or 9.2% of the national total. Automakers in Shanghai may have to stop all production by May if the supply chain disruptions are not resolved soon, according to Xpeng’s Co-founder and Chief Executive He Xiaopeng, adding “the good news is that some ministries and relevant authorities are trying to coordinate. We hope a concerted effort can be made to support the industry.” General Motors and Volkswagen both make cars in Shanghai with their Chinese partner SAIC Motor. Tesla’s Gigafactory 3, the sole wholly foreign-owned car factory in China, is also located at the Lingang free-trade zone in Pudong. Tesla may resume work this week after three weeks of suspension.
Factories that wanted to maintain their production had to operate under so-called “closed loop management”, requiring staff to sleep on-site with zero contact with outsiders. Because most factories lack the facilities to accommodate all employees at the workplace, they had to operate at reduced capacity. Tesla has halted production of its Model 3 electric cars and its Model Y electric crossovers since March 28 because it could not obtain enough protective gear to run its factory under the closed loop. Thousands of component makers faced the same problems.
The resulting strain on the supply chain is reverberating across the entire nation and the whole industry. Nio had to suspend its production of electric cars in Anhui's provincial capital of Hefei from April 9 to 13 because its supply of vital components was disrupted in Shanghai, and in Jiangsu and Jilin provinces. FAW Group has resumed producing passenger cars for Volkswagen and Toyota in the Jilin provincial capital of Changchun after suspending all output on March 13. In neighboring Liaoning province, Brilliance China Automotive Holding said it has resumed making BMW luxury cars with its German partner in the provincial capital of Shenyang. BMW-Brilliance did not say how many days they halted production.
To alleviate the strain on supply chains, the Ministry of Industry and Information Technology (MIIT) dispatched a team to Shanghai to resume work in 666 key enterprises, including chip foundries, carmakers and biomedicine companies, the South China Morning Post reports.
