China’s heatwave shuts factories that supply parts to Tesla, Intel and Toyota

The world’s largest electric vehicle battery maker, Contemporary Amperex Technology Co., Ltd. (CATL), and Intel are among major companies to close their factories in China’s Sichuan province for six days because of a heatwave-related power shortage in the region. . CNN and bloomberg,

The move affects factories belonging to companies such as Tesla’s battery supplier CATL, Apple’s supplier Foxconn Technology, Toyota, Texas Instruments, Volkswagen, Onesemi, and more.

China ordered all factories in Sichuan to halt operations by August 20 to ease pressure on the power grid after a surge in air-conditioning use caused China’s worst heatwave in 60 years. According to CNN, temperatures in several cities (40 degrees Celsius) soared to 104 degrees Fahrenheit.

Officials say they are trying to save electricity for homes in the region as authorities warn Sichuan is facing “the most serious and extreme moment” in power supply, Chinese state news outlet Sichuan Daily Report. This is likely because the region is dependent on hydropower, making it particularly vulnerable to heatwaves and droughts that are also drying up hydro dam reservoirs.

As CNN noted, Sichuan is an important region for the semiconductor and solar panel industries. Manufacturers flock to the mineral resource-rich region for raw materials used in the solar photovoltaic and electronics industries, such as polysilicon – a major solar panel component. The province is also an important mining center for lithium, which is used to make electric car and smartphone batteries.

Some analysts believe that the temporary shutdown could push up the price of both polysilicon and lithium as supplies decrease. As of August 17, exactly two days after the shutdown, industry executives confirmed bloomberg The price of polysilicon had really gone up.

However, some companies do not anticipate much disruption. According to bloombergFoxconn – which makes Apple’s iPads in the region – said the drought had not affected them much so far. Meanwhile, Volkswagen on Monday reportedly commented that it was not expecting lengthy delivery delays.

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