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Texas Power Grid Woes Hit Toyota, Tesla

Texas Power Grid and Tesla try to conserve power

ELLEN CHANG, The Street.com.  As a lengthy heatwave sears Texas, the state’s power grid operator is struggling to meet demand, forcing it to seek reduced usage from industrial companies in the state.

Toyota, Samsung and Tesla  (TSLA) – Get Tesla Inc. Report, among others, have made moves to curb electricity usage.

Toyota is cutting back on the number of production hours at its San Antonio plant to conserve power.

A spokesperson for the Japanese automaker said Toyota is planning to stop production before 2 p.m. and reduce its night shifts as Texas faced an extreme heat wave with temperatures rising above 100 degrees, according to a Reuters article.

The power grid operator in Texas, the Electric Reliability Council of Texas (ERCOT), took steps on Wednesday to avoid rolling blackouts. ERCOT asked businesses and consumers to conserve power starting on July 11 as demand and temperatures rose.

The Toyota plant had previously scheduled five days of summer shutdown next week, and added two additional days due to a global semiconductor shortage, Toyota said. The seven days of closures are unrelated to the heat wave, the spokesperson added.

Other companies in Texas have scaled back their power usage, including Samsung Electronics Co Ltd. as the heat wave continues into the fourth day.

“We are carefully monitoring the weather conditions and communicating with local authorities, and will adjust our plans accordingly,” Samsung said in a statement on Thursday.

General Motors Co  (GM) – Get General Motors Company Report said on Thursday it has not cut its production capacity at its plant in Arlington, Texas, but lowered its usage of air conditioning.

Tesla  (TSLA) – Get Tesla Inc. Report urged its customers to avoid charging their cars during peak hours to avoid adding strain to the power grid in Texas.

Extreme heat and cold both are a challenge for the Texas power grid. In Early 2021 a prolonged cold snap left thousands without power in the state.

Semiconductor Chips Still Backlogged

Toyota’s cutbacks come as automakers continue to face supply chain issues that have plagued the industry since the start of the pandemic.

Semiconductor companies such as OnSemi  (ON) – Get ON Semiconductor Corporation Report, NXP Semiconductors  (NXPI) – Get NXP Semiconductors N.V. Report and Microchip  (MCHP) – Get Microchip Technology Incorporated Report that manufacture microcontrollers and power management chips for the automotive industry will face constraints into the second half of the year, Angelo Zino, an equity analyst at CFRA, a New York-based investment research company, previously told TheStreet.

The Toyota plant in San Antonio manufactures pickup trucks, including the full-size Tundra and compact Tacoma Pickup. It has about 2,600 employees.

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