Tesla, Apple Face Dicey Future as China Reopens Factories Amid Coronavirus

Some Tesla employees at the Shanghai Gigafactory returned to work on Monday, February 10, 2020, after an extended break due to the coronavirus outbreak.

Some Tesla employees at the Shanghai Gigafactory returned to work on Monday, February 10, 2020, after an extended break due to the coronavirus outbreak. HECTOR RETAMAL/AFP via Getty Images

After an extended two-week national sabbatical due to the Wuhan coronavirus outbreak, people in China started returning to work on Monday under strict safety guidelines. While the epidemic has yet to show signs of retreat, for American companies with factories in China, a return to work means the economic impact from the unexpected public health crisis is finally coming under control.

Tesla, for example, saw share price jump 9% on Monday morning as its Shanghai Gigafactory partially resumed operation after a forced two-week shutdown, which would inevitably affect its delivery timeline for Model 3 and Model Y cars in the spring.

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But only less than half of Tesla’s workforce was allowed to resume work immediately, as employees who had traveled outside Shanghai during the Lunar New Year holiday (January 22 to February 2) were required to undergo a 14-day quarantine after returning to the city. On Monday, about 40 shuttle buses, compared to the usual 100 or so, took employees to work at the Gigafactory. according to Japanese newspaper The Asahi Shimbun.

Tesla has assured investors that the production hiccup wouldn’t have a major impact on the company’s bottom line next quarter, because the Shanghai factory represents only “a small fraction” of Tesla’s total production.

In contrast, Apple, whose gadget supply relies heavily on Chinese manufacturing, may not have such luck, especially as its largest supplier, Foxconn, announced further extension of plant closures on Sunday. According to Bloomberg News, Foxconn’s management had sent a memo to employees on Sunday, saying that it hadn’t decided on a back-to-work date for its iDPBG (integrated Digital Product Business Group) business unit, which makes iPhone, iPad and other Apple gadgets.

The iDPBG unit has one facility in Zhengzhou in central China, not far from Wuhan, where the novel coronavirus first erupted, and two plants in Shenzhen near China’s southern border.

Foxconn said on Monday that its factories will comply with government requirements and resume output in an “orderly manner” by staggering the return of workers, per Bloomberg.

By Sunday, the death toll from the coronavirus outbreak had reached 910. Total reported cases of infection have climbed to 40,573, more than 40,000 of which are in China.

Tesla, Apple Face Dicey Future as China Reopens Factories Amid Coronavirus