Electric car manufacturing giant Tesla has announced an emergency two-week shutdown of its primary production site in Germany, citing disruption caused by the Iranian-backed Houthi rebels attacking Red Sea shipping.
In what could be called the first major economic reverberation of these Red Sea attacks felt in Europe, production will cease at Tesla’s “Gigafactory” plant in Grünheide between January 29th and February 11th due to a shortage of components, primarily from Asia. A Tesla representative said the company was facing delays caused by the forced redirection of container vessels around the Cape of Good Hope.
The Grünheide factory is Europe’s sole Tesla hub specialising in the production of electric batteries and Model Y cars. The production stoppage comes amid serious challenges to the German EV sector caused by rising energy costs, existing supply chain constraints and competition from America and China.
The strategically important maritime passage has been the site of naval and drone attacks by the Yemen-based Islamist group in support of Hamas terrorists, who massacred Israelis on October 7th and are at war with Israel in Gaza. In response, British and U.S. airstrikes on the Yemeni mainland commenced last week.
Tesla’s difficulties are mirrored by those of Swedish-based auto-maker Volvo, impacted by the Red Sea slowdown. It halted production in its Belgian facilities for three days in response to the flow of trade through the Red Sea slowing down by 60% in December alone.
The Red Sea crisis leaves Europe and particularly Germany vulnerable, with the latest economic indicators showing a 1.9% drop in European exports primarily caused by the turmoil in the Middle East region. Experts warn that attacks could have severe consequences for Asia-Pacific imports.
While U.S. forces continue to exchange fire with the Iranian-backed militias, various EU member states led by France have actively avoided joining the U.S./UK military response to Houthi attacks.
One French official said that French distance from airstrikes on Houthi positions in Yemen was to maintain credibility in the Islamic world, amid diplomatic attempts by European governments to defuse a potential war between Hezbollah and Israel in Lebanon. Spain, meanwhile, will not participate in a planned joint cooperation between the U.S. and EU in the Red Sea, although Germany is expected to take part in a proposed EU-backed group of three ships that may be sent there, according to leaked documents.
