Tesla China is hopeful that Giga Shanghai will be operational again by February 10, following a long break for the Chinese New Year and the factory shutdown due to the novel coronavirus outbreak. Speaking about the nCoV outbreak, Tesla China VP Grace Tao also emphasized that the company prioritizes its social responsibility to its workers, customers, and the country at the forefront, especially when making decisions.
In the Q4 2019 Earnings Call, Tesla CFO Zachary Kirkhorn announced that the Giga Shanghai’s Model 3 ramp would be delayed for one to one-and-a-half weeks because of a government-required factory shutdown.
“For Q1, please keep in mind that the industry is always impacted by seasonality….We are also in the early stages of understanding if and to what extent we may be temporarily affected by the coronavirus.
“At this point, we're expecting a 1 to 1.5-week delay in the ramp of Shanghai built Model 3 due to a government required factory shutdown. This may slightly impact profitability for the quarter, but is limited as the profit contribution from Model 3 Shanghai remains in the early stages,” said Kirkhorn.
As always, TSLAQ have jumped at the chance to spread FUD after hearing about Giga Shanghai’s temporary government-issued shutdown because of the nCoV outbreak. However, the situation isn’t as dire as it may seem.
Credit: Grace Tao/Weibo
Giga Shanghai’s Long Holiday
Grace Tao, Tesla China’s VP, noted that the China-based Gigafactory could be up and running again by February 10. The facility temporarily stopped operation sometime around the last week of January 2020.
Coincidentally, Chinese New Year was on January 25. Chinese New Year is equivalent to the holidays at the end of the year in the United States. Chinese New Year is a long holiday that usually stretches from seven to fifteen days. Some businesses and public institutions take the time to enjoy the extended holidays and rest during this period.
Companies and public institutions that rested for the full fifteen days of the national holiday will be returning to work on February 9, which happens to be a Sunday.
As such, work would likely resume on Monday, February 10, which is in line with Tesla China’s estimates. So if Giga Shanghai were to be operational again by Feb. 10, it would be like it didn’t miss a beat.
As Kirkhorn mentioned in the Earnings Call, Giga Shanghai has yet to start ramping, so the recent shutdown hasn’t affected Tesla much as a whole. Before the shutdown, the China-based facility had a production run-rate of 3k Model 3 a week.
Giga Shanghai hasn’t even started to really grind its gears. Once the coronavirus outbreak is subdued, everyone working in Giga Shanghai can fully concentrate on ramping production of the MIC Model 3. Then and only then will its contributions to Tesla be felt.
A couple of days worth of delay doesn’t seem like something that would stop Giga Shanghai for very long. Considering the resilience of Tesla's China team, Giga Shanghai will probably bounce back after a short period.
Tesla China’s Priorities
Amid the novel coronavirus outbreak, however, nothing is guaranteed. Earlier this week, Tao announced that MIC Model 3 deliveries would be postponed until after the Chinese New Year.
She also said that Tesla would try to postpone MIC Model 3 deliveries until the novel coronavirus outbreak is appropriately addressed, which reveals that the Shanghai branch is aware of this situation. Most people might not want to interact with others physically with nCoV spreading, so handovers may be a little tricky. As it stands, people have taken to staying in their homes during the outbreak.
Actively postponing deliveries—even after the government-required shutdown is lifted—reveals that Tesla is aware of its social responsibilities to its customers. Grace Tao’s words on Weibo and Tesla China’s recent actions reflect the company's social awareness.
“At the same time, as a listed company, funding donations require an internal decision-making approval process. Of course, all we can do is insignificant help compared to what the doctors and nurses who are fighting on the front line pay and sacrifice.
“They are the ones who really deserve attention. We will continue to protect employees, serve car owners, prepare for the resumption of production, and strive to provide the best products to Chinese consumers and contribute to the Chinese economy,” Tao wrote.
Shortly after the novel coronavirus outbreak began, Tesla owners in China received notifications informing them that their vehicles would have temporary access to free Supercharging. A few days after that news spread, Tesla China donated RMB¥5 million to the local CDC to help fight the novel coronavirus, and another RMB¥5 million went to subsidize the energy consumption from Tesla's free Supercharging offer.
Tesla China's actions in relation to the nCoV outbreak were mirrored by those who support the company in the country. There is a growing Tesla community in China, just like there is in the US, and a lot of them wanted to help in their own way during this outbreak. For instance, one group of Tesla supporters in China raised RMB¥123k to purchase N95 masks, surgical masks, and protective clothing for hospitals in Wuhan, the epicenter of the nCoV outbreak.
In conclusion, Giga Shanghai’s latest setbacks will not affect Tesla’s goals this year as much as shorts would lead people to believe. After all, Tesla, China has already proven that it can surpass expectations and any obstacles in its path in 2019. So the long-term effects of nCoV on Giga Shanghai may also be something Tesla China will overcome—and probably at a rapid pace if history has taught us anything.
Featured Image Credit: @teslacn/Twitter
Giga Shanghai looks to be resuming production on Feb 10
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