The heatwave in China has forced the closure of factories that supply parts to Tesla, Intel, and Toyota
Contemporary Amperex Technology Co. Limited (CATL), the world’s largest electric vehicle battery manufacturer, and Intel are among the major corporations closing their factories for six days in China’s Sichuan province due to a heatwave-related power shortage.
The move affects factories owned by Tesla’s battery supplier CATL, Apple’s supplier Foxconn Technology, Toyota, Texas Instruments, Volkswagen, Onsemi, and other companies.
China ordered all Sichuan factories to shut down until August 20th in order to relieve the strain on the power grid caused by China’s worst heatwave in 60 years, which resulted in increased air conditioning usage. Temperatures in several cities reached 104 degrees Fahrenheit, according to CNN (40 degrees Celsius).
Authorities are attempting to conserve power for residents in the region, as officials have warned that Sichuan is experiencing the “most severe and extreme moment” in power supply, according to the Chinese state news outlet Sichuan Daily. This is most likely due to the region’s reliance on hydropower, which makes it especially vulnerable to the heatwave and drought that is also drying up hydro dam reservoirs.
Sichuan is a vital region for the semiconductor and solar panel industries. Manufacturers flock to the mineral-rich region for raw materials used in the solar photovoltaic and electronics industries, such as polysilicon, a key component of solar panels. The province is also an important mining hub for lithium, which is used to make batteries for electric vehicles and smartphones.
Some analysts believe that the temporary shutdown will raise the price of polysilicon and lithium as supply decreases. Only two days after the shutdown, on August 17th, industry officials confirmed that the price of polysilicon had indeed increased.
However, some businesses do not expect too much disruption. According to Bloomberg, Foxconn, which manufactures Apple’s iPads in the region, said the drought hasn’t had a significant impact on them yet. Meanwhile, Volkswagen reportedly stated on Monday that it does not anticipate long delivery delays.