Huthi rebels' audacity on Red Sea throttles auto giants: Tesla, Volvo hit pause
The terror incited by the Huthi rebels in the Red Sea waters is resulting in a necessary halt in Tesla's production for two weeks. The shortage of components needed for car manufacturing is the direct cause of this decision. Besides Tesla, other brands from America are also grappling with difficulties associated with the increased dangers on the shortest sea route from Asia.
9:36 PM EST, January 14, 2024
Volvo is planning a production halt as well. However, according to Automotive News Europe, the impact will not be as significant as that experienced by Tesla. The Volvo factory in Ghent, Belgium, will only cease operations for three days. The temporary shutdown of this facility, which manufactures the XC40 and C40 models, is due to the insufficient supply of gearbox units. Meanwhile, other manufacturers are striving to prevent operational downtime.
Stellantis aims to counterbalance delivery delays of key production components via air transportation. This method is expected to facilitate the delivery of parts to European factories, addressing the potential deficit from elongated sea supply routes.
For the time being, Volkswagen maintains constant communication with transport companies and is currently expected to steer clear of production downtime. Thus far, BMW and Renault haven't reported any production issues. However, complications may arise concerning electric cars. As ANE notes, 67 percent of the components required for producing traction batteries originate from Asia.
Due to the conditions in the Red Sea, shipping companies are rerouting their container vessels. They are opting for considerably longer routes from Asia that bypass Africa. The downside to this solution is not merely extended delivery times but also the added expenses.
