Tesla, SAIC told Shanghai to prioritise electricity as Sichuan suffers from drought

Tesla, SAIC told Shanghai to prioritise electricity as Sichuan suffers from drought

People familiar with the matter said that Tesla and SAIC Motor Corp. told Shanghai s government they may have difficulty maintaining production if a power crunch in Sichuan continues to impact suppliers, prompting city officials to ask the province if it could prioritize electricity for the carmakers suppliers.

The two carmakers informed authorities in Shanghai that key parts of their supply chains could be impacted by power cuts in Sichuan, which is experiencing its worst drought on record. The Shanghai Municipal Commission of Economy and Information reached out to the government in Sichuan in a document that was subsequently circulated on Chinese social media.

Sichuan is one of the most populous provinces in China. It is highly dependent on hydropower, making it particularly vulnerable to a heat wave and drought that is pushing up air-conditioning demand and drying up reservoirs behind hydro dams.

Read more: Drought-Fueled Power Crisis in China Poses Risk to Clean Energy

According to the document, the Shanghai government asked for electricity supply to 16 auto parts suppliers based in Sichuan - including Chengdu Yinli Car Parts, the only company named in the document.

The people said Tesla is coordinating with the Shanghai and Sichuan governments to ensure that its suppliers in Sichuan have ample power, and that the carmakers haven't seen any production delays yet.

A representative for Tesla in China didn't want to say anything. A spokesman from SAIC, one of China's largest state-owned automakers, said via WeChat that the company is working with the local government of Sichuan to reduce any impact of the power crunch.

Toyota Motor Corp. and China's Contemporary Amperex Technology Co. Ltd., the world's top battery maker, closed plants earlier in Sichuan, with the Japanese automaker shutting a factory in the province of Chengdu and CATL halting activity at its major lithium battery base in Yibin. Panasonic Holdings Corp. halted a materials plant and car-parts supplier Denso Corp.'s operations, the Nikkei newspaper reported Friday.

Read more: Xi Highlights Drought Risk in China as Power Supplies Threatened.

People calling the Shanghai government and its entities selfish and arrogant have started a backlash on Chinese social media, where Tesla and SAIC suppliers may be prioritized for power as people suffer in intense heat.

One post reads that the lives of people in Sichuan seem less important than Tesla.

It is just too much, according to another. Thirteen people were hospitalized yesterday because of a heat stroke.