The decision came after Tesla assessed its short-term performance in the domestic market.
Tesla Inc. plans to reduce production at its Shanghai plant, according to people familiar with the matter, in the latest sign that demand in China is not meeting expectations.
People said that the production cuts will take effect this week. Who The request was not identified because the information was not made public. They estimate the move could reduce output by about 20% from full capacity, which is the rate at which the plant was operating in October and November.
The decision came after the carmaker assessed its short-term performance in the domestic market, a source said, adding that there is flexibility to increase output if demand picks up.
One Tesla represented in China declined to comment. The automaker’s shares fell as much as 5.3% to $184.50 before plunging to 2.8% at 8:24 a.m. Monday. New Yorkbefore starting a regular transaction.
The cuts mark the first time that Elon Musk’s electric vehicle maker has voluntarily reduced production at its Shanghai factory, with previous cuts due to the city’s two-month Covid lockdown or the coronavirus pandemic. supply chain disruptions. Recent price cuts and incentives such as insurance subsidies, along with shorter delivery times, suggest that demand has not kept pace with supply after doubling the plant’s capacity to around 1 million vehicles. each year.
Tesla’s China deliveries hit a record 100,291 in November, China Passengers Car As delivery times for the Model 3 and Model Y – the two vehicles Tesla makes in Shanghai – are markedly shortened, the association said on Monday, another sign that the factory is producing more cars than sold.
Any Model 3 and Model Y ordered in China today will ship within the month, Tesla’s website shows, down from four weeks in October and up to 22 weeks earlier this year. The Shanghai factory mainly serves the Chinese market, although some vehicles are exported to Europe and other parts of Asia.
Junheng Li, chief executive officer of equity research firm JL Warren Capital LLC, said in a November 22 report that full production capacity at the Shanghai plant is about 85,000 vehicles per month. “Without many promotions, new orders from the domestic market are likely to normalize at 25,000 in December,” she said, adding that increased output cannot be achieved. exports are absorbed.
Tesla is facing stiff competition from local automakers like BYD Co. and Guangzhou Automobile Group, which are raising prices in the world’s largest electric vehicle market. BYD posted record sales for the ninth consecutive month in November, with deliveries amounting to 230,000 units, including nearly 114,000 all-electric models.
This has contributed to Tesla – which has long shied away from traditional offers and advertising – to decide to offer extended insurance benefits, reinstate its user referral program, and even advertise on the internet. TV.
Tesla’s reliability is also in the spotlight again following two recalls in China in the past month that required both software fixes over-the-air and some vehicles being returned for maintenance. A recent fatal crash involving a Model Y that left two people dead has once again sparked discussion about Tesla’s safety record.
