Skip to main content

Electric vehicle maker Tesla Inc plans to slash production of its Model 3 sedans for two weeks, sources told Reuters on Thursday, at a time when demand is slowing for Tesla cars and the market faces a chip shortage.

They were not aware of the cause of the production slowdown, but one person said a chip shortage may have affected the production cutback, which would last until March 7.

Shares of Tesla slumped about 8 per cent to close Thursday’s session at $682.22. The company could not be immediately reached for comment.

Tesla said last month that it might face a temporary impact from a global semiconductor shortage and logistics disruptions at ports.

Samsung Electronics last week said it had suspended its factory in Austin, in Texas as winter storm caused power outages. Back in 2019, Tesla said its self-driving chips are made at Samsung’s factory in Texas.

Samsung declined to identify its customers for the factory.

Several automakers, including General Motors Co, Volkswagen AG, and Ford Motor Co, are hit by the shortage of chips, forcing them to scale down production.

Tesla Chief Executive Officer Elon Musk on Thursday tweeted that the company’s Fremont plant was shutdown for two days this week and reopened on Wednesday due to “parts shortages”. He did not provide any more information in his tweet.

Bloomberg first reported that Model 3 production will be suspended temporarily in California.

It was also unclear how much volume or revenue Tesla would lose due to the production halt. The Fremont plant has an annual production capacity of 500,000 Model 3s and Model Ys combined.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error

Tickers mentioned in this story