Exclusive-Tesla halts most output at Shanghai plant, April sales dive

© Reuters. FILE PHOTO: Tesla China-made Model 3 vehicles are seen during a delivery event at the carmaker's factory in Shanghai, China January 7, 2020. REUTERS/Aly Song

SHANGHAI (Reuters) -Tesla Inc has halted most of its production at its Shanghai plant due to problems securing parts for its electric vehicles, according to an internal memo seen by Reuters, the latest in a series of difficulties for the factory.

The automaker's sales in China had already slumped by 98% in April from a month earlier, data released by the China Passenger Car Association (CPCA) showed on Tuesday, underscoring the hit from China's hard COVID-19 lockdowns.

Shanghai is in its sixth week of an intensifying lockdown that has tested the ability of manufacturers to operate amid hard restrictions on the movement of people and materials.

Tesla (NASDAQ:TSLA) planned to manufacture fewer than 200 vehicles at its factory in the city on Tuesday, according to the memo, far below the roughly 1,200 units per day it had ramped up to shortly after reopening on April 19 following a 22-day closure.

Tesla did not respond to a request for comment.

After reopening, the factory produced 10,757 vehicles by the end of April, selling 1,512 of them, the CPCA said.

That compared to 65,814 cars sold in March and marked the lowest sales tally since April 2020, four months after the factory started delivering China-made cars.

Tesla did not export any China-made Model 3s and Model Ys from the Shanghai plant in April, the data showed.

Two people familiar with Tesla's operations said earlier that the Shanghai plant suspended work on Monday after it faced difficulties procuring supplies.

The company had been aiming to increase output at the plant to 2,600 cars a day as soon as next week, Reuters reported previously.

Overall passenger car sales for China, the world's largest auto market, dropped almost 36% in April from a year earlier, the CPCA said. However, sales of battery-electric vehicles and plug-in hybrids - a category China targets for incentives - rose more than 50%, boosted by particularly good performances by BYD and SAIC-GM-Wuling.

Another auto association estimated last week that overall auto sales in China had dropped 48% in April as lockdowns shut factories, limited traffic to showrooms and put the brakes on spending.

Shanghai authorities have tightened a city-wide lockdown imposed more than a month ago on the commercial hub with a population of 25 million, a move that could extend curbs on movement through the month.