China: Power to the people or to the carmakers?
The current heat wave in China, which marks the worst heatwave since 1961, is now also hampering car production accross the country. After extreme heat and drought led to power outages, the Sichuan province ordered most factories there to close for six days.
In the meantime, the shutdown has been extended by another five days. This is leading to interrupted supply chains with implications for major car manufacturers such as Tesla and SAIC.
With temperatures soaring across China, the combination of the increased use of air-conditioners and the shrinking of the Yangtze River has led to drought conditions in more than 70 of China’s cities. China’s Sichuan province is particularly affected because it is one of the country’s largest hydropower hubs.
Sichuan is an important centre for manufacturers of semiconductors, batteries and other car parts. According to CNN, power cuts rendered 16 auto suppliers in the region unable to manufacture sufficient parts.
While Shanghai is over 3000 kilometres from Sichuan Province, carmakers there, such as Tesla, are having to contend with disrupted supply chains, which the carmaker says is impacting production. Also in Shanghai are some major SAIC automotive factories, which include joint ventures with Volkswagen (VLKAF) and General Motors. In Chengdu city, Reuters reported last week that Japanese carmaker Toyota had to suspend operations. Foxconn’s factory in Sichuan is also feeling the squeeze.
Shanghai has asked for special treatment so its carmakers can continue with their manufacturing, but this has apparently caused a backlash on Chinese social media because many citizens found it “shameless” that car factories were allowed to operate while tens of thousands of people in Sichuan have not power at all.
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