Tesla and Volvo to halt European production after Red Sea shipping attacks by Houthi rebels

  • Red Sea attacks are causing a shortage of parts for Tesla and Volvo
  • Both companies are to temporarily halt European production as a result
  • Other vehicle manufacturers are bound to be affected, says expert

Time 7:12 am, January 13, 2024

Tesla and Volvo are temporarily halting some of their vehicle production in Europe because of a shortage of parts caused by attacks on Red Sea shipping by Houthi rebels.

Tesla told Reuters that it would suspend most of its car production at its factory near Berlin as of January 29 until February 11 because of a lack of components caused by ships being rerouted around Africa’s southern tip.

In a statement, Tesla said: ‘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 having an impact on production in Gruenheide.

‘The considerably longer transportation times are creating a gap in supply chains.’

Tesla didn’t say what components had been delayed arriving at the Gruenheide plant, where it makes EVs for European sale.

Meanwhile, Geely-owned Volvo Car is to halt production at its Ghent factory in Belgium for three days next week because of a hold-up in delivering gearboxes.

They’re not the only vehicle manufacturers that could experience shortages because of the Red Sea conflict either.

Reuters quoted Sam Fiorani of AutoForecast Solutions, which follows automotive production and supply chains, as saying: ‘It can’t be believed that they’re alone, only the first to reflect the issue.’

Responding to Tesla’s statement, Carwow managing editor Paul Barker said: ‘While this development is not completely surprising, it is certainly unwelcome news for Tesla.

‘However, manufacturers do typically have a better handle on supply chain crisis management in the wake of the chip-related disruption that followed on from Covid, and at this stage, we don’t believe new car buyers should panic about any return to longer delivery times for orders.

‘But if there is any future escalation of problems moving cars, or car parts, across the world, it would likely lead to an increase in demand, and increase in value, of good-condition second-hand cars.

‘Used car prices have been falling recently from historic highs, so I’m sure Europe’s whole automotive industry will be keeping a close eye on the on-going geo-political developments in the Red Sea.’

On Thursday, Britain and the US launched strikes on Yemen that were aimed at the Houthi militia, whose attacks have caused disruption to the vital shipping route.

The UK’s RAF Typhoon aircraft returning to RAF Akrotiri after the air strikes in Yemen. Pic by Sgt Lee Goddard:MoD:Crown Copyright:PA)

RAF Typhoon aircraft returning to RAF Akrotiri in Cyprus after joining the US-led coalition conducting air strikes against military targets in Yemen (Picture credit: Sgt Lee Goddard/MoD/Crown Copyright/PA)

Some tanker operators have stopped crossing the Red Sea after the air strikes on the Iran-backed Houthis, as conflict in the region following Israel’s war in Gaza escalates.

Container shipping rates leapt higher this week amid growing fears that tankers carrying everything from car batteries to phones and clothes will need to avoid the Suez Canal – the quickest route between Asia and Europe and which accounts for roughly 12% of global container traffic – for longer than originally thought.

The rerouting adds some 10 days and approximately $1m (circa £784,000) in fuel to journeys from Asia to northern Europe, with shipping giant Maersk saying it believes the situation will last for the foreseeable future.

Pictured at top for illustrative purposes is a Tesla factory in Texas. Courtesy of Tesla, Inc.

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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