Tesla has been hit with major production issue in response to the issues in the Red Sea as one of the world’s largest vehicle rental companies said it would be selling thousands of electric cars.
The Elon Musk-led brand announced that it would be forced to suspend most car production at its European factory near Berlin from January 29 until February 11.
It cited a lack of crucial parts for manufacturing based on the situation in the Middle East amid Houthi rebel attacks on shipping containers and vessels in the Red Sea.
The factory in Grünheide was officially opened in early 2022 with the Gigafactory being able to produce around 5,000 new vehicles every week.
Elon Musk faces a fresh Tesla headache
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The Gigafactory is seen as being crucial for Tesla's operations to ensure it can continue the output of vehicles across Europe and the Middle East.
It is believed that the electric vehicle maker is the first car company to announce an interruption in output as a result of the tension in the Red Sea.
In a statement, the brand said: “Due to a lack of components, we are forced to suspend vehicle production at the Gigafactory Berlin-Brandenburg between January 29 and February 11, with the exception of a few sub-areas.
“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 having an impact on production in Grünheide.
"The considerably longer transportation times are creating a gap in supply chains."
The UK and United States announced that they would undertake a bombing campaign of Houthi rebel targets in Yemen following several high-profile hijacking attempts of vessels in the key shipping route.
Commenting on the strikes against Houthi military targets, Prime Minister Rishi Sunak said it was “necessary and proportionate action”.
He added: “The Royal Navy continues to patrol the Red Sea as part of the multinational Operation Prosperity Guardian to deter further Houthi aggression, and we urge them to cease their attacks and take steps to de-escalate.”
Tesla was also rocked by the announcement that Hertz, one of the world’s largest car rental companies, would be selling around 20,000 of its electric vehicles.
Hertz said it would be removing many EVs from its US fleet, which includes Tesla and Polestar.
The brand cited higher expenses related to collisions and damages with EV repairs sometimes being more expensive given the parts involved.
It will replace electric vehicles with petrol-powered vehicles despite previously backing electric cars.
In 2022, Hertz announced that it would purchase up to 65,000 EVs over five years from Polestar and 100,000 EVs from Tesla.
A Hertz spokesperson said: “Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter, thereby supporting the company's decision to initiate the material reduction in the EV fleet.”
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The Tesla Gigafactory in Berlin will shut for almost two weeks
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It is expected that the company will take a £193million hit as a result of selling the electric vehicles.
