Sichuan ordered most factories to close for six days until Saturday as extreme heat and drought have caused a power crisis. The shutdown has since been extended for another five days. SAIC Motor — China’s largest automaker — and Tesla have informed the Shanghai city government that the energy crisis in Sichuan has disrupted supply chains and affected production at their factories in the city, according to reports. Shanghai, which is about 1,200 miles from Sichuan province, is home to Tesla’s ‘Gigafactory’, which has already built one million cars for the US EV company. SAIC has three major factories in Shanghai, including two joint ventures with Volkswagen ( VLKAF ) and General Motors ( GM ). Last week, the companies asked the Shanghai government to help their suppliers in Sichuan, which have been hit by power cuts. According to official documents cited by Chinese state media, 16 auto suppliers in the region were unable to manufacture sufficient parts last week due to power outages. Shanghai’s economic planning agency has asked Sichuan to increase power supply to these companies, including Chengdu Yinli Auto Parts. “SAIC and Tesla are the leading companies in Shanghai to build a world-class automotive center and have established important supply partnerships with many auto parts companies in Sichuan province,” the Shanghai government told Sichuan authorities, according to the documents. cited by Caixin. . CNN Business has reached out to the Shanghai government and the two automakers for comment, but has yet to hear back. China is facing its worst heat wave since 1961, with temperatures exceeding 40 degrees Celsius (104 degrees Fahrenheit) in more than 200 cities. The weather caused the country’s critical Yangtze River to shrink and led to drought in more than 70 cities. Extreme heat and drought have caused demand for air conditioning to rise and hydropower supplies to drop, straining the power grid. Sichuan, which is a hub for makers of semiconductors, lithium batteries and auto parts, closed most factories in the province last Monday. The local government said the move was made to ensure enough power for residents. The province extended the power outage for another five days on Saturday as high temperatures remained around 40 degrees Celsius while light rainfall continued. The electricity curtailment has already affected major international companies. Japanese automaker Toyota ( TM ), which has a plant in the city of Chengdu, suspended work at the plant last week, according to Reuters. The company did not immediately respond to a request for comment. Apple supplier Foxconn’s ( AAPL ) factory in Sichuan has also been affected, although the company said the impact was “not significant.” BOE Technology, a major maker of LCD and OLED panels, also said last week it had to make “production adjustments” in Sichuan in response to the power outages. Shanghai’s request for special treatment for its automakers has sparked backlash on Chinese social media, with many netizens describing it as “inappropriate” and “shameless” at a time when tens of thousands of people in Sichuan are without power. Automakers in China, including Tesla, were just beginning to recover from a months-long lockdown in Shanghai earlier this year that had hit its production and suppliers. Auto sales fell sharply in April, with Tesla sales down as much as 98% this month. — CNN’s Beijing bureau contributed to this report.
