Reuters reported late Thursday that Tesla plans to suspend most production at its factory outside Berlin in Gruenheide, Germany, from approximately January 29 to February 11 due to the conflict in the Red Sea that has disrupted global trade.
The Iranian-backed Houthi militia is attacking cargo ships and commercial ships in the Red Sea in response to the ongoing war in the Gaza Strip. These attacks have drawn condemnation from leaders around the world.
“Much longer transportation times create a gap in supply chains,” Tesla said He told Reuters In the current situation.
Analysts at Baird estimate that Tesla is producing 5,000 to 7,000 vehicles per week at its German auto assembly plant, which would imply a “hit of 10,000 to 14,000” for deliveries in the first quarter, according to a note Thursday.
Baird analysts wrote that they are “wary” of further impacts to Tesla's supply chain, and that they are “closely monitoring” any impact on the company's shipping routes from China. “No delays were indicated, but we expect disruptions in the Red Sea to lead to longer wait times as supply chains are rerouted,” they wrote.
Analysts also focused on Tesla's ongoing price cuts including new discounts in China. Morgan Stanley analysts noted that Model 3 and Model Y vehicles were recently discounted, although the reductions were “more moderate than the market had expected,” according to a note issued Friday.
Price cuts over the past year have affected Tesla's ability to continue selling its all-electric cars in bulk to car rental companies including Sixt and Hertz.
Hertz CEO Stephen Scherr said on CNBC's “Squawk on the Street” on Thursday that his company will take 20,000 electric cars from its fleet, which consists mostly of Tesla vehicles.
Shear said Hertz is trying to “bring supply in line with demand,” and “address the cost issue of EVs in the context of damage and damage costs” as well as the depreciation of EVs.
Meanwhile, Tesla's business and reputation remain under pressure in Europe due to ongoing labor strikes in Sweden and throughout Scandinavia.
At its US factories, the electric car maker is implementing increases in worker pay rates starting this month, a move seen as a tactic to stave off workers' desire to join unions. The wage increases come on the heels of the UAW's historic victories in 2023 with Tesla's rivals in Detroit, and the UAW's announcement that it will aim to organize outside the Big Three including Tesla, Toyota and others.
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