Tesla, others prepare Shanghai factory restarts as city aims to ease lockdown

Manufacturers including Tesla began preparing to reopen their Shanghai factories on Monday, as the city accelerated efforts to exit a Covid-19 lockdown that has forced most businesses in China's economic hub to shut for nearly three weeks.

Tesla has recalled workers to its factory to prepare for the restart, two sources told Reuters. They added that while the US automaker had initially intended to resume one production shift on Monday it was now looking to do so on Tuesday. One of the sources said one reason was because a supplier was facing issues with logistics.

Tesla did not immediately respond to a request for comment.

SAIC Motor, the Chinese partner of Volkswagen and General Motors, said it would start stress-testing its production resumption plans on Monday.

Meanwhile, Shanghai aims to stop the spread of Covid-19 outside of quarantined areas by Wednesday, Reuters cited sources as saying on Sunday, which would allow a further easing of its lockdown. It is stepping up testing and the transfer of positive cases and their close contacts to isolation centres to meet that target. 

The lockdown has ground business to a halt in China's most populous city, while wider curbs are rattling global supply chains and taking a mounting toll on the world's second-largest economy during a key year for President Xi Jinping, who is expected to secure a third leadership term in the autumn.

Lockdown-weary residents are bristling over hardships that for many include difficulties securing food as well as lost incomes, separated families and poor conditions at quarantine centres.

While Shanghai had previously said companies could stay open if they managed to isolate their workers on site through "closed loop management", that has proven onerous for many including Tesla and Volkswagen, which shut their plants on April 1.

And even if workers were willing to stay on site, procuring supplies has become difficult after cities near Shanghai implemented their own Covid-19 curbs and as truck transportation has been severely disrupted.

White list

China's industry regulator stepped in on Friday, publishing a "white list" of 666 firms mainly in Shanghai's semiconductor, auto and medical supply sectors that it prioritised for ongoing operations.

An employee at a company on the list, who did not want to be identified as she is not authorised to speak publicly, was told by her employer that she could apply for a permit to drive to work or be picked up from home.

Other companies that are preparing to reopen include biotechnology firm Shanghai Raas Blood Products Co Ltd and a unit of Shanghai Pharmaceuticals, , the state-backed Shanghai Securities News reported on Monday.

Companies applying to resume work must stock up on medical supplies and also establish closed loops for workers who must live at the workplace or be limited to travelling between work and home, according to guidance issued on Saturday.

Zero-Covid goal

Shanghai is under pressure to deliver on China's Covid-19 elimination strategy, which largely kept the coronavirus at bay for the last two years but is increasingly challenged by the highly infectious Omicron variant.

On Monday, Wu Qianyu, an official from the Shanghai Municipal Health Commission, said the city would kick off a new round of daily PCR and antigen tests for residents in "sealed" and "controlled" areas from Monday to Thursday.

"We hope that the majority of our citizens will continue to cooperate as always," she said at a Monday news conference.

"So we can stop the spread of the virus, achieve the goal of zero-Covid at community level as soon as possible, and allow normal production and life to resume."

Shanghai has carried out more than 200 million PCR tests since March 10, when the city's cases started surging, state media said.

Of 21,395 new local infections Shanghai reported for Sunday, 561 were found outside quarantine areas, down from 722 on Saturday, the third consecutive decline.

Shanghai also reported that three people infected with Covid-19 died on Sunday, the first time during the current outbreak that it reported deaths among coronavirus patients.

The patients, two women and a man who were aged between 89 and 91 years, suffered from underlying health conditions such as coronary heart disease, diabetes and hypertension, the city said.