Reuters reported today that Tesla’s Shanghai factory is planning to reduce Model Y production by at least 20 percent between March and June. Citing a source familiar with the matter, the report indicated uncertainty about whether this reduction would extend into the second half of the year or affect the Model 3 line. It also remains unclear if similar production cuts are planned for Tesla’s factories in the US and Germany.
The Shanghai facility, Tesla’s largest globally with an annual capacity exceeding 950,000 vehicles, currently produces both the Model 3 sedan and Model Y crossover. The production adjustment is a response to weakening demand for Tesla’s older model in China, according to the Reuters report.
Data from the China Association of Automobile Manufacturers (CAAM) shows that Model Y production in China reached 49,498 units in March and 36,610 units in April, marking year-on-year declines of 17.7 percent and 33 percent, respectively.
Despite the production cuts and recent layoffs in Tesla’s Chinese sales and charging service teams, the company maintains its target to sell between 600,000 and 700,000 vehicles in China in 2024. Tesla’s global electric vehicle (EV) sales target of 2 million for the year remains unchanged from the start of 2024, Reuters noted, citing another source.
Tesla initiated a plan to reduce its global workforce by more than 10 percent in the middle of last month, impacting its team in China as well.
In 2023, Tesla achieved strong sales in China, delivering 603,664 vehicles, up 37.27 percent from 439,770 in 2022, according to the China Passenger Car Association (CPCA). Model Y and Model 3 sales in China in 2023 totaled 456,394 vehicles and 147,270 vehicles, respectively, marking year-on-year increases of 44.74 percent and 18.33 percent.
From January to April this year, Tesla sold 163,841 vehicles in China, a 7.64 percent decrease compared to the same period last year, according to CPCA data.
