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Tesla and Volvo Car Production in Europe Suspended Due to Houthi Rebels’ Attacks on Shipping in the Red Sea

Elon Musk’s Tesla and Volvo Car, owned by Geely, have announced that they are suspending part of their production in Europe due to a shortage of parts. These are some of the first visible impacts of Houthi rebels’ attacks on shipping in the Red Sea on manufacturers, Reuters writes.

Tesla will suspend most production from January 29 to February 11 at a factory near Berlin. The reason is precisely the lack of components caused by the redirection of ships to the route around the southern tip of Africa. Volvo Car will suspend production in Ghent, Belgium, for three days next week due to a three-day delay in the delivery of gearboxes, Reuters reports.

The United States and Great Britain launched a series of strikes on Thursday against the Iran-backed Houthi militia, whose attacks on international shipping have disrupted one of the world’s most important sea lanes since November.

Container shipping rates have increased again this week. They were responding to growing concerns that ships carrying everything from clothes to car batteries would have to avoid the Suez Canal, the fastest route from Asia to Europe, for longer than expected, the agency explained.

According to Reuters, there is a risk that higher prices for freight transport, as well as oil, could increase inflation again. 12% of global traffic flows through the Suez Canal. Low water levels caused by the drought, which has limited the Panama Canal, another key trade route, don’t add to the logistical problems.

The conflict in the Red Sea could affect other automakers in the future, according to Sam Fiorani of AutoForecast Solutions, which tracks supply chains and car manufacturing. “It cannot be believed that they (Tesla and Volvo Car manufacturers) are alone, they are only the first to reflect this problem,” he reports to Reuters.

2024-01-13 16:00:26
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