The CEO of Chinese electric vehicle manufacturer Xpeng was warned that automakers might have to suspend operations in May if Covid restrictions in Shanghai and surrounding areas continue to cause major disruption.
Lockdown measures introduced by Beijing to curb the spread of Covid-19 in China have seen numerous factories grind to a halt, and the effects are being felt through global supply chains for a range of consumer goods, with the electronics industry particularly suffering.
Xpeng CEO He Xiaopeng warned in a post on Chinese social network Weibo that the automotive industry would not be able to continue production for much longer under the current scenario, noting that some Chinese authorities appear to be making efforts to resolve the situation.
“All Chinese car manufacturers will have to stop production in May, if there is no way for those in Shanghai and suppliers nearby to restart operations and production,” said He.
He is not the only Chinese business leader to comment on the effect Covid restrictions are having in the country. Richard Yu, chief executive of Huawei’s consumer business group and smart car solution unit, also posted on Weibo that manufacturing could grind to a halt in May if a solution is not found soon. “This is especially the case for the auto industry, and the economic loss could be huge,” Yu wrote, as per technode.com.
Auto manufacturers are already feeling the effects of lockdowns that began in March, initially in the city of Changchun before being extended to include Shanghai. The Shanghai lockdown could lead to a 20% drop in vehicle sales, the China Passenger Car Association warned this week.
Tesla has suspended production at its Shanghai plant since March 28th, whilst fellow EV manufacturer Nio also suspended operations despite no restrictions in place at their Hefei factory, citing closures elsewhere and the disruption caused to supply lines.
Volkswagen’s auto sales in China fell by almost 24% year-on-year for the first quarter, with the company’s China CEO Stephan Wöllenstein commenting that lockdown measures played a major role in the drop.
Companies with operations based in the northeast of China have resumed production following an end to lockdown measures in those regions. State-owned FAW Group has resumed limited production at its Hongqi plant whilst BMW announced that it recommenced operations at all of its Shenyang plants on Thursday.