Tesla Shut Down Fremont Factory Temporarily Over Parts Shortages, Musk Confirms

Tesla Inc TSLA temporarily halted production at its Fremont, California factory due to parts shortages, according to CEO Elon Musk.

What Happened: On Thursday, Musk confirmed the production stoppage on Twitter but did not delve into specific details about the reasons behind the pause.

Last month, at the company’s conference call, Chief Financial Officer Zachary Kirkhorn made a reference to the global shortage of semiconductors. 

“We're working extremely hard to manage through the global semiconductor shortage, as well as port capacity, which may have a temporary impact.”

Separately, in an email seen by Electrek, Musk confirmed the factory shutdown to Tesla employees. 

“Fremont production is back up and running as of yesterday and will speed up rapidly to full Model 3/Y production over the next few days.

See also: How to Invest in Tesla Stock

The CEO also hinted at a production boost and robust demand for revamped Model S/X vehicles.

“Model S/X production lines are almost done with the retooling and will be aiming for max production next quarter. There is high demand, so we are soon going to need to go back to two shifts. Please recommend friends for recruiting.”

Why It Matters: Tesla expects to deliver 50% more vehicles in 2021 than the nearly 500,000 vehicles it delivered last year, reported the Wall Street Journal.

Kirkhorn reportedly said the production of Model S and Model X vehicles would face impediments in the first quarter due to the revamp, but deliveries could rise due to an increase in Model Y manufacturing in China.

See Also: Tesla Sells Out Of Q1 Supply Of Model Y In China Just Days After Opening Order Page: Report

On Wednesday, Ford Motor Company F CEO Jim Farley said that the United States must begin making batteries on a large scale to avoid a scenario like the present semiconductor shortage.

Chip shortages have led to erosion of automotive earnings by one-third at Ford and General Motors Co GM, according to Bloomberg. 

Price Action: Tesla shares closed nearly 8.1% lower at $682.22 on Thursday and fell 2.08% to $668 in after-hours trading. 

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