Tesla Halts Fremont Model 3 Line For Two Weeks

Tesla (NASDAQ:TSLA) is temporarily halting the Model 3 production line at its key factory in Fremont, California, for two weeks, a source with knowledge of the matter told Bloomberg, while carmakers are reeling from a global shortage of microchips.

Workers at the line manufacturing Model 3 at Fremont have been told that the line would be idle between February 22 and March 7, Bloomberg reported on Thursday. The workers have not been informed of the reason for the halt and were advised to take vacation time if they had it because they would not be paid for the full two weeks.

The idling of the Model 3 line at Fremont comes amid a global shortage of microchips which has impacted carmakers around the world, including in the United States. This month, the U.S. auto manufacturing industry is scaling back production, including that of the top-selling U.S. vehicle.

China's soaring imports of semiconductors, the rise in the electronics industries, and the jump in technology use during the pandemic, combined to create a perfect storm on the global semiconductor market, whose supply chain is strongly interconnected.

Detroit's Big Three announced this month that they would be reducing production at some factories in the United States, Canada, and Mexico, as the severe shortage of supply of semiconductors and microchips is affecting the global automotive supply chain.

Tesla, for its part, said in an SEC filing earlier in February, "For example, a global shortage of microchips has been reported since early 2021, and the impact to us is yet unknown. The unavailability of any component or supplier could result in production delays, idle manufacturing facilities, product design changes and loss of access to important technology and tools for producing and supporting our products."  

Earlier this week, President Joe Biden signed an executive order aiming to address and identify risks in the semiconductor manufacturing supply chains.

By Charles Kennedy for Oilprice.com

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