Tesla ‘To Cut Production’ At Shanghai Plant

Tesla reportedly plans to lower production at its Shanghai factory as soon as this week, the first time it has voluntarily reduced capacity there since the plant opened in late 2020.

The company could reduce production at the Shanghai factory by about 20 percent, according to unnamed individuals cited by Bloomberg.

The move is the latest indication that demand for Tesla’s vehicles in China, the world’s biggest car market, is not keeping up with supply.

Tesla completed an upgrade to the plant over the summer intended to double its capacity to about 1 million cars a year and inventory levels have increased sharply since then, with inventory increasing at its fastest pace ever in October.

Slowing demand

In response Tesla cut prices for its Model 3 and Model Y cars by up to 9 percent in China and offered insurance incentives.

Tesla even advertised on television, something it has long eschewed, relying instead on word of mouth.

This helped to boosted November sales of Shanghai-made vehicles to 100,291, up 40 percent from October and 89.7 percent compared to a year ago, Xinhua reported on Monday citing Tesla figures.

Demand for automobiles in China has slowed due to uncertainty over the country’s zero-Covid rules, which have led to lengthy, ongoing lockdowns and supply-chain disruption.

Competition

China’s government began easing Covid rules last month following widespread protests.

Tesla’s previous production drops at the Shanghai plant were caused by the city’s two-month Covid lockdown earlier this year and supply-chain issues.

In China Tesla faces increasing competition from home-grown rivals such as BYD and Guangzhou Automobile Group, with BYD posting a ninth consecutive month of record sales in November.