Red Sea Conflict Disrupts Tesla Production at German Plant

Tesla, the prominent electric car manufacturer, announced a temporary halt to the majority of car production at its factory near Berlin, Germany.

This suspension will last for two weeks, starting from January 29th to February 11th, with only a few specific areas remaining operational, according to an official statement released by the company.

The reason cited for this production interruption is a shortage of crucial components. Tesla attributed this component scarcity to the ongoing crisis in the Red Sea region.

In this area, Houthi militants, backed by Iran, have been launching attacks on ships in solidarity with the Palestinian militant-Islamist group, Hamas, which is engaged in conflict with Israel in Gaza.

Tesla further elaborated that the armed conflicts in the Red Sea have led to alterations in shipping routes between Europe and Asia, particularly via the Cape of Good Hope.

These shifts in transport routes have hurt production at Tesla's facility in Grünheide.

Notably, Tesla's decision to suspend production due to these disruptions marks the first instance of such an interruption by a major company.

Other companies, including Geely, China's second-largest automaker by sales, and Swedish home furnishing giant Ikea, have already issued warnings about potential delivery delays.

The attacks carried out by Iranian-backed Houthi militants have compelled the world's leading shipping companies to circumvent the Suez Canal, the quickest maritime route connecting Asia to Europe.

The Suez Canal accounts for nearly12% of global maritime traffic. Consequently, shipping giants such as Maersk and Hapag-Lloyd have opted for longer and costlier voyages around South Africa's Cape of Good Hope.

This alternative route adds roughly ten days to the journey from Asia to northern Europe and incurs an additional fuel cost of about $1 million (€910,000).

Tesla has been producing electric vehicles in Grünheide near Berlin since March 2022, employing approximately 11,500 individuals at the facility.