Following a three-week production halt due to Covid-19 lockdown, Tesla (TSLA)’s Gigafactory Shanghai finally received local government approval to resume operations on April 19. It comes with an onerous condition, however: All of its workers must live on-site at the factory under a “closed-loop system” in order to reduce the risk of contracting or spreading Covid-19.
Tesla began preparing for reopening on April 15. By April 19, it had recalled about 8,000 workers, about half of its workforce before the lockdown, according to local media. Returning employees will be working 12 hours per day, six days a week under stringent working condition never seen in other Tesla factories before.
Tesla owners have historically bought electric vehicles, at least in part, due to concerns about the impact of fossil fuels on the planet. It’s reasonable to imagine those progressive impulses may extend to worrying about the well-being of Tesla’s factory workers.
But some vocal Tesla fans, at least, don’t seem troubled. “That’s just a temporary measure to comply with Shanghai government’s policy of ‘closed-loop system,’ which applies to all other manufacturers including the GM joint venture factory nearby. Don’t think this hurts Tesla’s image in any way,” said a Tesla owner who goes by the name @Ray4Tesla on Twitter.
“Pretty sure workers like this temporary treatment better than being confined in their own apartments without pay, extra stipend, free meals and possibly facing food shortage,” @Ray4Tesla tweeted to his 56,000 followers on April 18.
According to an internal memo first reported by Bloomberg, Tesla will provide returning workers with sleeping bags, mattresses and three meals a day. Workers will be sleeping on the factory floor in a designated area, with showering and entertainment spaces coming soon. To encourage more workers to return, Tesla will also offer a daily stipend of about 400 yuan (about $63), per Bloomberg, though the exact amount will depend on a person’s rank in the company. The average monthly salary of a production worker at Giga Shanghai is about 9,000 yuan ($1,400), according to jobs ads site Indeed.
Tesla detractors say Giga Shanghai is now an inhuman sweat shop cuz workers are forced to sleep on factory floors. Pretty sure workers like this temporary treatment better than being confined in their own apts w/o pay, extra stipend, free meals & possibly facing food shortage.
— Ray4Tesla⚡️🚘☀️🔋 (@ray4tesla) April 18, 2022
Surviving under China’s zero-Covid policy
Shanghai has been under a strict lockdown since March 28, forcing almost all businesses to pause operation and 25 million residents to stay at home. Shanghai is China’s financial and manufacturing center and it’s estimated each day the city is on pause results in more than 10 billion yuan ($1.56 billion) in lost gross domestic product (GDP). Shanghai contributes to 4 percent of China’s total GDP while accounting for less than 2 percent of its total population.
Fearing irreparable economic costs if the lockdown continues, China’s Vice Premier Liu He, who is in charge of the economy, ordered a small batch of companies in Shanghai to reopen this week. All of them are required to operate under tight restrictions so none are in outright violation of President Xi’s zero-Covid policy.
Tesla is one of more than 600 businesses the Chinese government deems important enough to reopen first. Also on the list are General Motors’ local joint venture, SAIC, and Quanta Computer Inc., which makes Macbooks for Apple.
Before the lockdown, Tesla Giga Shanghai was operating 24 hours a day, seven days a week using three shifts of workers, churning out about 2,000 vehicles a day. It will take Tesla some time to return to full-speed production. The factory only has inventory for about two weeks based on its production schedule, Bloomberg reported. A close-loop system means it won’t be able to order and receive raw material and parts as usual. Some of its suppliers outside of Shanghai also face challenges making or shipping parts and components for the factory.
A Giga Shanghai spokesperson said Tesla is working with suppliers to recover the supply chain as much as possible.