Sichuan is enduring rolling blackouts as electricity demand rises to cope with temperatures reaching 40°C. Rainfall has declined to about 50% of normal, reducing output of the hydroelectric power that accounts for nearly 80% of the southwestern province’s generating capacity.
The province had ordered companies using industrial power to suspend production operations for six days starting Aug 15. Local media report that businesses have been told to extend this suspension. The policy applies to 16,000 companies in 19 of the province’s 21 cities including a Toyota Motor factory and production facilities for Foxconn, a key Apple supplier.
Following the initial order to shut plants, Shanghai’s city government informed Sichuan on Tuesday that Tesla and domestic automaker SAIC Motor conduct business with 16 parts manufacturers in the province, requesting the resumption of their operations on a priority basis to prevent disruptions to car assembly.
Shanghai’s request sparked a backlash, as elevators in Sichuan apartment buildings have been shut down. Chinese newspapers report that Shanghai revised its request on Wednesday, asking only that the resumptions be considered rather than seeking priority resumption of operations. The parts factories are believed to remain closed.
Tesla’s Chinese operations sold 290,000 vehicles during the first half of the year including exports, British research firm LMC Automotive reports. In addition to domestic sales, the American EV maker’s Shanghai plant also serves as an export hub for Europe and other markets and is estimated to account for 50% of the company’s global sales.
Shanghai’s coronavirus lockdown earlier this year forced Tesla to suspend the plant’s operations. If procuring parts from Sichuan becomes so difficult that it interferes with the operation of the Shanghai plant, the EV maker might rethink its global marketing strategy. Some Tesla charging stations in Sichuan and the nearby city of Chongqing are not operating, and users are complaining.
“Many major auto suppliers, including Japanese manufacturers, procure parts from companies that have plants in Sichuan province,” an automaker said, citing the impact of the production shutdowns on other carmakers beyond Tesla.
Some component makers have resumed limited operations by installing in-house power generation equipment, and inquiries for such generation equipment have increased rapidly.