Tesla to Halt Production at German Car Factory as Red Sea Conflict Hits Supply Chains

By William Boston

BERLIN--Tesla plans to halt production at its Berlin factory for two weeks due to the conflict in the Red Sea continuing to disrupt transport ships, raising the specter of a new supply-chain crisis for European manufacturers dependent on parts from China and other Asian countries.

Tesla said in a statement Friday that it would stop nearly all production at its factory near Berlin from Jan. 29 and resume production on Feb. 12 because of a lack of components needed at the plant.

"The considerably longer transportation times are creating a gap in the supply chains. Due to a lack of components, we are therefore forced to suspend vehicle production in the Gigafactory Berlin-Brandenburg," Tesla said.

Iran-backed Houthi fighters have been targeting international shipping in the Red Sea, disrupting global transport and raising the threat of a widening of the conflict. The disruptions are causing transport companies to seek alternative routes, delaying delivery of parts needed at factories in Europe.

The production stoppage is reminiscent of the major disruptions to deliveries of key components made in China that suddenly became unavailable to factories when the pandemic hit Chinese manufacturing. Later, supply chains were again hit by a shortage of semiconductors built in Asia.

It is not yet clear whether the components shortage affecting Tesla is the first sign of a broader disruption of European manufacturing supply chains.

Write to William Boston at [e-mail]

(END) Dow Jones Newswires

January 12, 2024 04:16 ET (09:16 GMT)

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