Tesla’s China output halted for days last month on chip shortage

Tesla Inc. temporarily halted some operations at its factory in Shanghai last month, according to people familiar with the matter, as the global shortage of semiconductors hit the electric car pioneer in one of its most important markets.

Part of a production line at the China plant was halted for about four days in August because of a lack of key chips, the people said, asking not to be identified because the details are private.

One particular shortage had to do with the availability of electronic control units, small devices that control one or several electrical systems in a car, one of the people said. That caused output delays mainly for Tesla’s Model Y sports utility vehicle crossover, the person said. Production is now back to normal, the people said.

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

Intense competition for chips has hit a raft of industries over the past year, with the pandemic both boosting demand for electronics and interrupting supply chains. With semiconductors now used in vehicle’s computers to sensors, automakers globally have lost revenue as shortages affected their output.

Toyota Motor Corp., the world’s biggest carmaker, will cut production by 40% in September from previous plans, while India’s largest automaker by deliveries, Maruti Suzuki India Ltd., has also said volumes will likely drop to about 40% from regular levels. On Wednesday, Chinese EV upstart and Tesla rival, Nio Inc., said it is struggling with getting supply from manufacturing partners in Malaysia, where Covid-19 is flaring again, and Nanjing, in eastern China.

In China, Tesla shipped around 33,000 electric cars locally and to overseas markets in July. The Palo Alto, California-based company previously halted some production at its car-assembly plant in the U.S. for about two weeks in February due to backlogs at ports and snow storms that affected ground transport.

Retail sales of cars, SUVs and multipurpose vehicles in China -- the world’s biggest market for electric cars -- declined by 6.4% in July from a year earlier to 1.52 million units, according to China’s Passenger Car Association. Preliminary data show August sales are expected to fall 13%, the association said Wednesday.