As electric vehicle maker Tesla (TSLA) – Get Tesla Inc Report is preparing to resume operations at its Gigafactory Shanghai after shutting down since March 28 for a Covid-19 lockdown, tech giant Apple (AAPL) – Get Apple Inc. Report faces a new threat of a manufacturing shutdown in China for one of its popular products.
Tesla plans to resume production at its Shanghai plant on April 18 after a three-week shutdown that was required as part of the city’s Covid-19 lockdown. China’s largest city locked down on March 28 in two stages to conduct Covid-19 testing over nine days.
The shutdown was the second time the Austin, Texas-based electric vehicle maker 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.
Volkswagen Group China (VWAGY) – Get Volkswagen AG Report and General Motors (GM) – Get General Motors Company Report 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.
Finding a Way to Reopen
Tesla is expected to implement “closed-loop” operations, which authorities have approved, that requires workers to remain in the plant at all times. Employees will live, work and sleep in isolation from the rest of the world to prevent the spread of the virus.
Shanghai-based electric vehicle manufacturer Nio (NIO) – Get NIO Inc. (China) Report on April 9 suspended production at its Hefei, China, plant because of supply chain issues that the Covid lockdown continues to impact.
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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.
Covid Lockdowns Lead to Factory Shutdowns
City officials of Zhengzhou, northeast of Shanghai, on April 15 announced a Covid-19 lockdown, according to Bloomberg, in the Zhengzhou Airport Economy Zone where Apple’s largest iPhone factory operated by Taiwan-based Foxconn Technology Group is located. The lockdown has led the company to require its employees have mandatory Covid testing.
Foxconn, which assembles Apple’s iPhones at the Zhengzhou plant, on March 14 also shut down its factories in Shenzhen in southern China near Hong Kong after city officials implemented a Covid-19 lockdown.
The China Covid-19 lockdowns could result in a loss in production of 6 million to 10 million iPhone units analysts said, according to 9to5Mac. Other Apple products affected by the lockdowns include MacBook Pro and iPad Air.
Pegatron and Quanta Computers, other Apple suppliers located in Eastern China, have reportedly shut down operations as well.
What effect the manufacturing shutdowns will have on Apple stock is uncertain as shares fell 3% on April 14 to $165.29 in the regular session on the day before the announcement of the plant shutdown. The markets were closed April 15 for Good Friday.