Intel and CATL, heavyweights in the supply chain for electric vehicles, are among the firms that have been forced to temporarily close their factories in China in the face of the heat wave affecting the country. A measure that could impact the price of cars at the end of the chain and extend delivery times.
We are starting to know the song with the production concerns that are impacting the electronics and electric vehicle market… except that this time it’s not the Covid that is to blame, it’s the heat wave.
When the heat wave reduces the available electricity
The Verge CATL (Contemporary Amperex Technology Co. Limited), the world’s largest manufacturer of batteries for electric vehicles, announced last week a six-day shutdown of its factories in China’s Sichuan province. Intel and other important players in the supply chain are in the same boat and must also close their local production sites over the same period to comply with the temporary measures imposed by the Chinese authorities.
Due to electricity shortages caused by the heat wave (the worst in 60 years) currently affecting certain regions of China, this decision could ultimately have an impact on the many companies that depend on CATL batteries. Among them, Tesla, but also Foxconn (assembler of iPhones and iPads on behalf of Apple, in particular), Toyota, Texas Instruments, Volkswagen, Onsemi and many others.
Sichuan province, central in many ways in industrial production
The province of Sichuan, located in western China, derives most of its electricity production from hydraulic dams installed on its territory. A hydroelectricity that inevitably comes to lack in a context of heat wave leading to a notable drop in the level of the rivers and rivers of the region and their flows.
Rich in mineral resources, Sichuan is an important province for the production of semiconductors and solar panels. It is also a major mining center for the extraction of lithium, an essential component of batteries for the automotive world and electronic devices.
In the immediate future, and despite the forecasts of some analysts, Foxconn and Volkswagen have announced that they do not expect too significant consequences from these closures for their activity. Reassuring statements which could however be brought to evolve in the event of new electricity rationing measures impacting the production chain.
Source : The Verge
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