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Tesla, Nio and Volkswagen Face a Puzzling Headache

The resurgence of the Covid-19 pandemic in China adds a new headache to manufacturers of electric vehicles.

Electric vehicle deliveries from automobile manufacturers in China face an unknown future as EV makers like Tesla, Volkswagen and Nio keep plants closed over Shanghai's Covid lockdown and related supply chain issues.

Authorities in Shanghai have not said when they plan to completely lift their Covid lockdown, which they implemented on March 28, though officials lifted some restrictions in certain areas on April 11, . Tesla  (TSLA) -  and other EV makers thought they would close operations for maybe four days when the lockdown was first announced, but they instead have been closed for 16 days and counting.

Tesla closed down its Gigafactory Shanghai production facility March 28 after China's largest city said it would lock down in two stages to conduct Covid-19 testing over nine days.

The Austin, Texas-based electric vehicle maker had notified its workers and suppliers of its shutdown at the world's largest electric vehicle factory.

The shutdown was the second time Tesla closed production in the Shanghai facility in March after the company shuttered for two days on March 16 as the government tightened restrictions because of a rise in Covid omicron cases.

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Volkswagen Joined EV Makers in Shutdown

Volkswagen Group China  (VWAGY) -  and General Motors  (GM) - on March 28 said they would not shut their Shanghai area plants and continued to operate. GM's employees agreed to live, work and sleep at their manufacturing plants under so-called "closed-loop" operations, which allow the factories to remain open. Volkswagen, however, on April 1 reversed its decision to keep its Anting district factory open and shut it down.

"During this time we will carry out maintenance work in the factory," a Volkswagen company spokesperson told bovada at the time. "The Covid situation in China is quite dynamic and we usually go day by day."

The spokesperson said that the company had to partially stop production in Anting due to a lack of supply.

in the fourth quarter of 2021, or over 15,000 per month. 

Tesla's Shanghai factory, which opened in January 2020, delivered 65,814 EVs in March and produced 56,515 electric vehicles in February, with 33,315 targeted for export. The factory is being ramped up to eventually produce 1 million EVs each year.

The factory, which produces about 2,000 EVs a day, has been shut down for 16 days, which amounts to about 32,000 vehicles lost from production.

Supply Chain Issues Add to Covid Concerns

Shanghai-based electric vehicle manufacturer Nio  (NIO) -  on April 9 suspended production at its Hefei, China, plant because of supply chain issues that the Covid lockdown continues to impact.

Nio announced on its mobile app that it shuttered the plant after its suppliers in various cities shut down production because of a Covid outbreak lockdown in Shanghai.

The shutdown was the second time Nio closed production because of supply chain issues as it suspended manufacturing in its Hefei plant for five working days on March 29, 2021, due to a semiconductor shortage.

Nio also shut its plant from Sept. 28 to Oct. 15, 2021, to restructure and upgrade manufacturing lines and prepare to introduce new products. The shutdown resulted it the company delivering only 3,667 vehicles in October 2021, a 27.5% decrease year-over-year.

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Toyota  (TOYOF)  also reportedly idled automobile production in China in March.