Tesla has reportedly reduced production at its Shanghai plant as sales of electric cars in China experience slower growth amidst intense competition in the world’s largest car market.
According to insiders cited by Bloomberg, Tesla has scaled back production of its Model 3 and Model Y vehicles at the Shanghai plant to five days a week, down from the previous 6.5 days. The production lines will now operate in two shifts of 11.5 hours each for the remaining days of the week. It is unclear when production will resume at full capacity, as Tesla has not provided a clear indication.
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This reduction in production means that Tesla will likely operate around 23 percent fewer shifts, down to ten shifts from a potential 13, if the information from insiders is accurate.
Tesla’s decision comes amidst increasing competition from Chinese automakers like BYD, which has made significant gains in the Chinese market in recent years, widening the gap with Tesla. Additionally, Tesla’s Model Y for the European market is now being produced at Giga Berlin, further impacting the demand for vehicles from the Shanghai plant.
Approximately a year ago, reports suggested that Tesla aimed to increase production in Shanghai to 20,000 vehicles per week due to strong demand. However, the company’s annual report for 2023 indicated a production target of “>950,000 units” for Giga Shanghai, up from the previously stated 750,000 vehicles per year.
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Tesla has not responded to Bloomberg’s request for comment on the production adjustments. However, the news of reduced production has already affected Tesla’s stock, which fell by 3.9 percent before regular trading began.
The adjustment in production underscores the challenges Tesla faces in the competitive Chinese market, where local manufacturers are increasingly gaining ground, posing a significant challenge to the electric car pioneer.
