Tesla announced on Thursday that it will suspend most of its car production at its factory near Berlin from January 29th to February 11th, citing a change in transportation routes caused by the Red Sea vessel's attack, resulting in shortages of some components.
"The armed conflicts in the Red Sea and changes in transportation routes between Europe and Asia via the Cape of Good Hope have also had an impact on production in Glenhead (the location of the Berlin factory)," Tesla said in a statement. "The extension of transportation time has caused a gap in the supply chain."
Tesla stated that production will fully resume on February 12th. The company did not respond to more details such as which parts are missing and how production will resume at that time.
Iranian backed Hussein militants attacked Red Sea ships as a sign of support for the Palestinian Islamic organization Hamas fighting against Israel in Gaza, triggering the Red Sea crisis.
The attack by the Houser militants has forced almost all top shipping companies around the world to avoid the Suez Canal, which is the fastest sea route from Asia to Europe, accounting for about 12% of global sea transportation. These shipping giants choose to detour around the Cape of Good Hope in South Africa, which increases the distance from Asia to Nordic Europe by about 10 days and fuel costs by about $1 million.
Tesla faces more pressure
Tesla's partial shutdown indicates that the crisis has had an impact on Germany, Europe's largest economy.
This shutdown has further increased the pressure on Tesla, and the company is currently engaged in a labor struggle with the Swedish union IF Metall over the signing of a collective bargaining agreement, which has triggered sympathy strikes from many unions in the Nordic region.
On November 24th, workers at Hydro extrusions, a subsidiary of Norwegian aluminum and energy company Hydro, stopped producing parts for Tesla's automotive products. These workers are members of IF Metal.
It is worth noting that Tesla was the first company to disclose that its supply chain was disrupted due to the Red Sea crisis and production was halted.
Previously, many companies, including Geely, China's second largest car manufacturer by sales, and Swedish home furnishing giant IKEA, have issued warnings of delivery delays.
More car companies may be affected
Analysts predict that other car manufacturers may also be affected by the Red Sea conflict.
Sam Fiorani, Vice President of AutoForecast Solutions, which tracks the automotive supply chain and production, pointed out that the reliance on Asia for so many key components in the automotive manufacturer's supply chain has always been a potential weakness. Tesla heavily relies on battery components from Asia, which require red shipping to Europe, posing continuous risks to its production.
He also stated that Tesla is not an exception, but only the first car company to reflect this issue.