Tesla to idle China plant as Shanghai moves to stem virus

Shanghai will lock down the city in two phases to conduct a mass testing blitz for COVID-19, as authorities scramble to staunch a spiraling outbreak in the Chinese financial hub and beyond.

At 5 am on Monday, the city of 25 million people locked down areas east of the Huangpu River, which includes the financial district and industrial parks, for four days. The lockdown then shifts to the other half of the city, in the west, for another four days, according to a statement Sunday from the local government.

Residents will be barred from leaving their homes, while public transport and car-hailing services will be suspended. Private cars will not be allowed on the roads unless necessary. Production at Tesla Inc.’s Shanghai factory will be suspended because of the curbs, people familiar with the move told Bloomberg News.

The first gigafactory outside Tesla’s home country produced half of the electric carmaker’s vehicles last year and had to suspend production for two days earlier this month. The company said at the time that it was making its “best effort” to ensure production could continue at the plant, while “actively cooperating with the government’s order for Covid tests and relevant pandemic prevention measures.”

The Shanghai factory is crucial for Tesla, considering China is the company’s second-largest market and the plant builds cars for export to Europe and elsewhere in Asia. The China Passenger Car Association earlier this month reported that Tesla delivered 56,515 cars from the factory in February alone — 23,200 for the domestic market and 33,315 for export.

The sweeping restrictions come as China experiences its worst Covid spread since the initial outbreak in Wuhan, with 5,550 locally-acquired cases reported nationwide on Saturday. Authorities locked down the tech hub of Shenzhen in the south earlier this month, while more than 2,000 miles to the north, Jilin, which borders Russia, saw its capital city shut on March 11 and days later the entire province sealed off. The region, a hub for auto-making, remains locked down.

Infections in Shanghai, home to the Chinese headquarters of many international companies and the country’s largest port, have climbed in recent days despite repeated and expanded testing, a key tool in China’s intensive Covid Zero arsenal. The financial hub reported 2,676 new infections Saturday, up 18 percent from a day earlier, overtaking Jilin as the nation’s biggest Covid hot spot.

The Shanghai Stock Exchange will shift many services online, and extended the time window for listed companies to release statements to 11pm local time. Firms will also be able to apply to postpone the publication of their full-year earnings.

Shanghai’s port, the world’s biggest, will maintain operations during the lockdown, the Securities Times reported.

The lockdowns in Shenzhen and now Shanghai, two of China’s most economically significant cities, show the growing toll — and challenge — of maintaining a zero-tolerance approach to the virus amid more transmissible variants. While most countries have started to live alongside Covid, accepting it as endemic, China is maintaining its strategy of closed borders, mandatory quarantines and mass testing, even as it becomes more difficult by the day.

For Shanghai, the latest restrictions mark a departure from the city’s previous approach, which was more targeted when it came to curbs and testing. Officials there had resisted a full-blown lockdown to avoid disruption to businesses, only to see the highly infectious omicron variant continue to spread.

As virus cases started to rise this month, Shanghai reacted by shutting schools and suspending all cross-province bus services. An increasing number of residential towers around the city have been sealed sporadically over the past few days due to suspected cases.

In its statement released Sunday night, Shanghai’s government said it will ensure basic supplies such as electricity, fuel as well as food during the lockdown periods.

Still, the surprise announcement immediately sparked a rush for groceries as residents sought to stock up on necessities ahead of the first lockdown, which is scheduled to start at 5am local time on Monday.

Over the past week, many Shanghai residents have been hoarding supplies due to uncertainty over building lockdowns — the city’s strategy until now — and a lack of delivery drivers. Shanghai police detained two men last week on suspicion of spreading rumors that the entire city was headed into a total lockdown.

Officials stressed that citizens’ emergency medical needs will be guaranteed during the lockdown.

A nurse died of asthma Wednesday night after being turned away from Shanghai East Hospital as the emergency department was closed for disinfection under Covid control rules. She subsequently died at another hospital, according to a statement from the medical center in the city’s Pudong district.

There were similar scenes earlier this year when the central city of Xi’an, home to the famed terracotta warriors, was locked down to tame a outbreak. While case levels are nowhere near what is being seen in the West and even in other parts of Asia, China’s hardcore response has become disruptive, spurring President Xi Jinping to urge officials to avoid impact to the economy while continuing to suppress Covid.

Along with Tesla, plants run by Toyota Motor Corp. and Volkswagen Group in Jilin province have been shut down for weeks due to the lockdown there. In Shanghai, financial-market traders have been sleeping at their offices to avoid building lockdowns that would prevent them from the trading floor.