Tesla and Volvo to Pause Production in Europe After Red Sea Attacks


Tesla and Volvo said their assembly lines in Europe would be suspended in coming weeks because of attacks in the Red Sea that have forced cargo ships to take longer routes, disrupting supply chains.

The factory stoppages, announced late Thursday and on Friday, follow weeks of attacks by the Houthis, a Yemeni rebel group backed by Iran, on ships sailing through the Red Sea, a corridor to the Suez Canal.

“The armed conflicts in the Red Sea and the associated shifts in transport routes between Europe and Asia via the Cape of Good Hope are also having an impact on production in Grünheide,” Tesla said in a statement first reported by Reuters, referring to the company’s plant in Germany.

Shippers carrying goods from Asia to Europe now face the choice of either sending their vessels through the Red Sea, if they are willing to risk attacks and bear the cost of sharply higher insurance premiums, or sailing an extra 4,000 miles around Africa, adding 10 days in each direction and the cost of additional fuel.

“The considerably longer transportation times are creating a gap in supply chains,” Tesla said. The statement said production at the electric vehicle maker’s factory outside of Berlin would be suspended Jan. 29 to Feb. 11.

Volvo, majority-owned by the Chinese automaker Geely, said that production would be suspended at its plant in Ghent, Belgium, for three days next week because “adjusted sea routes” have delayed the delivery of gearboxes.

The company added that the delay was not expected to affect global retail sales deliveries or production plans.

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