Tesla To Halt Production At Berlin Plant Amidst Red Sea Disruption

Tesla has said it will halt most production at its plant near Berlin for two weeks due to parts deliveries delayed by attacks on ships in the Red Sea.

Most production will stop from 29 January to 11 February, the firm said, meaning about 5,000 to 7,000 cars would not be built.

“The armed conflicts in the Red Sea and the associated shifts in transport routes between Europe and Asia via the Cape of Good Hope are also having an impact on production in Grünheide,” Tesla said in a Friday statement.

“The considerably longer transportation times are creating a gap in supply chains.”

Image credit: Tesla

‘Fresh blow’

Analyst Susannah Streeter of Hargreaves Lansdown said the pause was a “fresh blow to Tesla’s production targets and comes amid fierce competition from Chinese manufacturers”.

She noted that Chinese auto giant Geely, which owns Volvo and Lotus, has also said there would be a delay to delivery of EV models in Europe.

Tesla’s shares have had their worst start to any year since it went public in 2010, losing more than $94 billion (£74bn) in value during the first two weeks of 2024 amidst a string of negative headlines about the firm.

At the beginning of January Tesla lost its place as the world’s biggest electric vehicle (EV) manufacturer to China’s BYD, while car rental firm Hertz has scaled back its EV fleet and said last week it would sell off 20,000 of the vehicles, some one-third of its EVs, due to higher-than-expected depreciation and damage and lower-than-expected demand.

Tesla’s Gigafactory 3 in Shanghai. Image credit: Tesla

Profit margins

Meanwhile Tesla recently introduced another price cut in China and has begun giving pay rises to staff in the US, eroding its profit margins, which had already fallen to 16.3 percent in the third quarter from 27.9 percent a year earlier.

Investors are also concerned about slowing growth for EVs, something of which Tesla warned in its October third-quarter earnings report.

The warning was soon afterward echoed by other major carmakers and suppliers, with many reducing their expansion plans.

Tesla’s share price drop has caused the personal fortune of chief executive Elon Musk to decline in value by $23bn so far this year, according to the Bloomberg Billionaires Index.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

Recent Posts

AT&T Says Tech Giants Should Fund Rural Broadband

AT&T chief says biggest tech companies should be forced to contribute to troubled fund for…

2 hours ago

Recording Labels Sue Start-Ups Over AI-Generated Music

World's biggest music groups sue two AI start-ups over auto-generated songs they say are trained…

3 hours ago

White House Says Microsoft’s G42 AI Deal ‘Positive’ As It Ousted Huawei

White House says Microsoft's $1.5bn investment in AI company G42 was 'positive' because it forced…

3 hours ago

China Memory Chip Maker YMTC Sues Tech Consultancy For Libel

Chinese memory chip maker YMTC sues Danish tech consultancy Strand Consult for libel in California…

4 hours ago

EU, China Agree To Talks Over Planned EV Tariffs

EU, China hold talks and agree to further negotiations as bloc plans tariffs up to…

4 hours ago

Workers Killed In Fire At South Korean Battery Plant

At least 22 workers killed in fire at lithium battery plant near Seoul after chain…

18 hours ago