Tesla factory halts production amid Red Sea turmoil

tesla factory

Tesla has been forced to halt car production at a key factory in Berlin as Houthi rebel attacks in the Red Sea disrupt its supply chain.

The electric car company said it would suspend a large part of its car production for almost two weeks, from January 29 to February 11, amid a lack of vehicle parts.

Tesla’s factory in Germany relies heavily on parts from Asia, such as battery technology, but cargo ships are taking longer than usual to reach Europe as they avoid key shipping lanes through the Suez Canal.

Container ships have been forced to avoid the Red Sea after a series of missile launches and raids on vessels by Iran-backed Houthi rebels.

On Friday, Tesla said: “The armed conflicts in the Red Sea and the associated shifts in transport routes between Europe and Asia via the Cape of Good Hope are also having an impact on production in Gruenheide.

“The considerably longer transportation times are creating a gap in supply chains.”

Reuters first reported Tesla’s plans to partially shut down production.

Houthi rebels have launched an escalating series of attacks on cargo ships passing through the Red Sea, claiming it is taking action against ships linked to Israel in response to the conflict in Gaza.

On Thursday night, Prime Minister Rishi Sunak authorised strikes by the Royal Air Force against Houthi bases, alongside US forces. Mr Sunak said the air raids were an “act of self-defence”.

Disruption to supplies of parts add to Tesla’s woes in Europe, with local industrial action already impacting its operations in Scandinavia.

Elon Musk’s electric car company is also grappling with increased competition from new rivals such as China’s BYD, prompting a price war.

Chinese car makers have also said the fighting could lead to slower deliveries of electric vehicles to Europe.

Shipping bosses have warned delays to Red Sea shipping could last for months. Food retailers including Tesco have cautioned the disruption could add to food price inflation.

Shares in Tesla fell around 1pc in after hours trading.

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