NASDAQ title Tesla shares lighter after trading: Tesla stops production in Grünheide due to unrest in the Red Sea

The electric car manufacturer Tesla has to largely stop production in Grünheide near Berlin for around two weeks due to attacks on ships by the Yemeni Houthi rebels in the Red Sea.

As transport routes are shifting, a gap has arisen in the supply chains, as Tesla announced on Thursday.

“Due to missing components, we are therefore forced to suspend vehicle production in the Berlin-Brandenburg Gigafactory with the exception of a few areas between January 29th and February 11th,” the company explained. Production will resume fully from February 12th.

Since the Gaza war broke out between Israel and the Islamist Hamas, the Houthi rebels in Yemen have repeatedly attacked ships with alleged Israeli connections in the Red Sea. So far there have been 27 attacks on international merchant ships.

The Suez Canal connects the Mediterranean with the Red Sea and provides the shortest sea route between Asia and Europe. However, large shipping companies are increasingly avoiding the important trade route. According to US information, more than 2,000 ships took a detour. However, the alternative route around the South African Cape of Good Hope is much longer.

The attacks in the Red Sea could generally slow down the economy, as oil is also transported through the route. The USA and Great Britain attacked positions of the Houthi rebels in Yemen on Friday night.

“The armed conflicts in the Red Sea and the associated shifts in transport routes between Europe and Asia via the Cape of Good Hope are also affecting production in Grünheide,” said Tesla.

Tesla has been producing electric cars in Grünheide since March 2022. Around 11,500 employees work there. Tesla wants to double production in Grünheide from the targeted 500,000 cars per year to one million per year. According to its own information, the company currently produces more than 250,000 vehicles annually. The storage capacity of battery cell production is expected to increase from 50 to 100 gigawatt hours per year. Environmentalists have concerns about the expansion.

In after-hours trading on NASDAQ, Tesla shares temporarily lost 0.95 percent to $225.05.


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