Tesla plans to partly resume production in its Shanghai factory as soon as next week

The electric vehicle pioneer told some employees on Friday to enter a so-called “closed-loop” production system on April 17, whereby workers live on-site and are tested regularly, according to the people, who asked not to be identified as the information is not public.

To bypass the current restrictions in local districts or residential compounds, the company will issue a special certificate for those on call, and will arrange shuttle buses to bring them back to the plant, one of the people said.

Tesla didn’t immediately respond to a request for comment.

Tesla’s Shanghai plant, its first outside the U.S., will have halted production for three weeks as of April 17. At a run rate of about 2,100 cars a day, that’s around 44,100 units lost since the lines fell silent on March 28, or about 14.5% of the company’s global output in the last quarter.

The plan remains vulnerable to any change in the government’s COVID prevention policy, and it will take awhile for the company to ramp up fully. Only some of the employees were arranged back in the first “closed loop,” which may run from 10 to 20 days, according to an internal survey reviewed by Bloomberg. The eventual start requires the coordination of workers, equipment maintenance, suppliers and logistics.

Actual capacity, even after the staggered resumption, will depend on whether surrounding cities are locked down too and “the supply of components Tesla can get,” said Junheng Li, an analyst at JL Warren. 

‘Sense of urgency’

Premier Li Keqiang has repeatedly warned of risks to economic growth, telling local authorities on Monday they should “add a sense of urgency” when implementing existing policies. The Ministry of Industry and Information Technology vowed to push forward production resumption at major factories in Shanghai, in efforts to ensure a smooth supply chain, according to a statement from MIIT released on Friday. 

Businessmen including He Xiaopeng, chief executive of Chinese EV startup Xpeng Inc., have warned of potential losses to the state economy and key industries. 

“If supply chain companies could not find a way to resume operation and production, it’s likely all automakers in China may have to suspend production in May,” he said.

Another Shanghai-based automaker, SAIC Corp., is also canvassing employees and suppliers about resuming production shortly, according to a person familiar with the matter, citing an internal memo. The company will also issue a special work return permit to allow employees to leave their residential compound, and will liaise with suppliers on some initial moves, or “pressure tests,” as soon as Monday, the memo reviewed by Bloomberg said.

All employees returning from outside the factory will be separated from workers staying in the plant through the lockdown period for the first three days. They can return to their original posts after testing negative for the coronavirus.

SAIC “is not going to resume production as early as Monday, but is doing some preparation work among suppliers, logistics, and the whole-vehicle production,” a spokesman said. “Pandemic prevention is still our first priority, and once our preparation work is done, we’ll start to gradually resume production.”