Tesla has been forced to halt production of the Model 3 at their assembly plant in California. The interruption is due to the global microchip and semiconductor shortage. Tesla is hardly the first major automaker to feel the sting of the microchip bottleneck. Workers on the Model 3 sedan in Fremont, California were told that their production line would be down from February 22 until March 7. Impacted staff were told they would be paid for February 22 and 23, but not paid on February 28, March 1, 2 and 3. They were advised to take paid vacation time off, if they had it.
While production-line outages aren’t unusual for automakers, they cost the companies revenue. Tesla recently said they were trying to mitigate the effects of a global semiconductor shortage on its operations. They also still expect to increase global vehicle deliveries by more than 50% this year. It remains to be seen how much of an impact this stoppage will have on those goals.
Tesla’s Ambitious Goals
Hitting maximum deliveries is crucial for Tesla, in order for CEO Elon Musk to meet his goal of selling 20 million cars a year by 2030. The company has already cut the price of its various EV models 14 times this year in markets such as China, Japan and France. Those moves have prompted concerns that the company isn’t meeting its sales targets. Tesla stock prices actually dropped down to $652 briefly this week, after previously riding high in the $850 range.
Tesla isn’t the only automaker forced to temporarily halt production due to the microchip shortage. General Motors, Ford, and Volkswagen have all had to implement similar production cuts this year for the same reason. Earlier this week, President Joe Biden signed an executive order aimed at strengthening domestic supply chains of microchips. He hopes to reverse the current chip shortage that is hurting automotive (and other electronic) production across the country.