Tesla delays plan to restore Shanghai output to pre-lockdown levels

A Tesla sign is seen at its factory in Shanghai
A Tesla sign is seen at its factory in Shanghai, China, May 13, 2021. REUTERS/Aly Song

SHANGHAI, May 16 (Reuters) - Tesla Inc (TSLA.O) has delayed a plan to restore production at its Shanghai plant to levels before the city's COVID-19 lockdown by at least a week, according to an internal memo seen by Reuters.

The U.S. electric car maker originally aimed to increase output at its Shanghai plant to 2,600 cars a day from May 16, Reuters reported earlier this month citing another memo.

But the latest memo said that it plans to stick to one shift for its Shanghai plant for the current week with a daily output of around 1,200 units. It also said that it would now aim to increase output to 2,600 units per day from May 23.

Challenges remain for Tesla to double the number of workers living and sleeping near production lines to maintain "closed-loop" operations, said a person familiar with the matter.

Companies in Shanghai are only allowed to reopen if they can operate under such an arrangement, which requires workers to be isolated.

There are also uncertainties over supplies, as factories of suppliers and logistics in Shanghai and surrounding areas have yet to be restored to normal, the person added.

Tesla did not respond to a request for comment. The person declined to be identified as the matter is private.

On one day last week, Tesla operated its Shanghai plant well below capacity, indicating the problems factories face trying to ramp up output under a tightening COVID-19 lockdown.

Shanghai aims to reopen broadly and allow normal life to resume from June 1, a city official said on Monday, after declaring that 15 of its 16 districts had eliminated cases outside quarantine areas. read more

On Sunday, Tesla shipped over 4,000 China-made cars from a Shanghai port to Belgium, the official Xinhua News Agency reported on Monday, the second batch of exports since its Shanghai plant resumed operation on April 19.

Tesla's manufacturing hub in Shanghai makes Model 3 and Model Y cars for both domestic sale and export.

Reporting by Zhang Yan, and Brenda Goh; Editing by Muralikumar Anantharaman and Christopher Cushing

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