Tesla Shuts Down Production Line Due to Microchip Shortage

Elon Musk’s electric vehicle manufacturer Tesla has reportedly shut down a Model 3 production line at its Fremont, California, factory for two weeks amid an industrywide microchip shortage.

Bloomberg reports that Tesla is shutting down a Model 3 production line at its production plant in Fremont, California, for two weeks amid an industrywide microchip shortage. Tesla reportedly informed employees from a Model 3 production line that their line will be shut down until March 7.

Bloomberg states that employees were told they would be paid for February 22 and 23, and not paid for February 28 through March 3. They were reportedly advised to take vacation time if they had it.

The employees were reportedly not informed of the reason behind the shutdown which so far has been unconfirmed. A component shortage appears to be the most likely explanation; Tesla’s vehicles are comprised of about 10,000 parts and if one of these is in shortage, the car is not produced.

The global auto industry is dealing with a shortage of microchips which has resulted in many vehicle production lines behind halted around the world. GM, Ford, Nissan, Toyota, Volkswagen, Suburu, and Fiat Chrysler have all announced halted or slowed production lines due to the problem.

In a 10-K filing with the SEC earlier this month, Tesla noted the shortage but stated it didn’t know yet how it would impact the firm, writing:

For example, a global shortage of microchips has been reported since early 2021, and the impact to us is yet unknown. The unavailability of any component or supplier could result in production delays, idle manufacturing facilities, product design changes and loss of access to important technology and tools for producing and supporting our products. Moreover, significant increases in our production, such as for Model 3 and Model Y, or product design changes by us have required and may in the future require us to procure additional components in a short amount of time.

COMMENTS