HT TECH wants to start sending you push notifications. Click allow to subscribe

Tesla Set to Cut Shanghai Output in Sign of Sluggish Demand

The decision was made after Tesla evaluated its near-term performance in the domestic market.

By: BLOOMBERG
Updated on: Dec 06 2022, 02:33 IST
Tesla’s shares fell as much as 5.3% to $184.50 before paring the decline to 2.8% at 8:24 a.m. Monday. (AP)
Tesla’s shares fell as much as 5.3% to $184.50 before paring the decline to 2.8% at 8:24 a.m. Monday. (AP)

Tesla Inc. plans to lower production at its Shanghai factory, according to people familiar with the matter, in the latest sign demand in China isn’t meeting expectations.

The output cuts will take effect as soon as this week, said the people, who asked not to be identified because the information isn’t public. They estimate the move could reduce production by about 20% from full capacity, which is the rate at which the factory ran in October and November.

You may be interested in

Mobiles Tablets Laptops
10% OFF
Apple iPhone 14
  • Blue
  • 6 GB RAM
  • 128 GB Storage
₹81,099₹90,400
Buy now
5% OFF
Apple iPhone 14 Pro
  • Gold
  • 6 GB RAM
  • 128 GB Storage
₹132,990₹139,900
Buy now
OnePlus Nord 2 8GB RAM
  • Grey Sierra
  • 8 GB RAM
  • 128 GB Storage
₹28,999
Buy now
13% OFF
OnePlus Nord CE 2 Lite 5G
  • Black Dusk
  • 6 GB RAM
  • 128 GB Storage
₹21,799₹24,999
Buy now
Dell Inspiron 14 5410
  • 8 GB DDR4 RAM RAM
₹77,399
Check details
Apple MacBook Pro M1 Max MK1H3HN A Ultrabook
  • 32 GB RAM RAM
₹309,890
Check details
Asus ROG Flow X13 GV301QH K6054TS Laptop
₹112,990
Check details
17% OFF
Dell Inspiron 14 5410 D560632WIN9S
  • 16 GB DDR4 RAM RAM
₹73,500₹88,199
Buy now
Realme Pad
  • Real Gold
  • 3 GB RAM
  • 32 GB Storage
₹22,999
Check details
Lenovo Tab P11
  • Platinum Grey
  • 4 GB RAM
  • 128 GB Storage
₹16,890
Check details
Realme Pad LTE
  • Real Gold
  • 3 GB RAM
  • 32 GB Storage
₹15,999
Check details
Moto Tab G20
  • Platinum Grey
  • 3 GB RAM
  • 32 GB Storage
₹10,999
Check details

The decision was made after the automaker evaluated its near-term performance in the domestic market, one of the people said, adding that there’s flexibility to increase output if demand increases.

Also read: Looking for a smartphone? To check mobile finder click here.

A Tesla representative in China declined to comment. The carmaker’s shares fell as much as 5.3% to $184.50 before paring the decline to 2.8% at 8:24 a.m. Monday in New York, before the start of regular trading.

The trimming marks the first time Elon Musk’s EV maker has voluntarily reduced production at its Shanghai plant, with previous reductions caused by the city’s two-month Covid lockdown or supply chain snarls. Recent price cuts and incentives such as insurance subsidies, along with shorter delivery times, suggest demand has failed to keep up with supply after an upgrade doubled the plant’s capacity to about 1 million cars a year.

Tesla’s China deliveries were a record 100,291 in November, China’s Passenger Car Association said on Monday, as lead times for the Model 3 and Model Y -- the two vehicles Tesla makes in Shanghai -- shortened markedly, another sign the factory is pumping out more cars than it’s selling.

Any Model 3 and Model Y ordered in China today should be delivered within the month, Tesla’s website shows, down from as long as four weeks in October and up to 22 weeks earlier this year. The Shanghai factory mainly serves the Chinese market, although some cars are exported to Europe and other parts of Asia.

Full production capacity at the Shanghai factory is around 85,000 vehicles per month, Junheng Li, chief executive officer of equity research firm JL Warren Capital LLC, said in a Nov. 22 note. “Without more promotions, new orders from the domestic market will likely normalize to 25,000 in December,” she said, adding that increased production couldn’t all be absorbed by exports.

Tesla is facing intensifying competition from local automakers such as BYD Co. and Guangzhou Automobile Group, which are raising prices in the world’s largest EV market. BYD posted a ninth consecutive month of record sales in November, with deliveries topping 230,000, including almost 114,000 pure-electric models.

This has contributed to Tesla -- which has long eschewed incentives and traditional advertising -- deciding to offer extended insurance subsidies, reinstating a user-referral program and even advertising on television.

Tesla’s reliability also is back in the spotlight after two recalls in China in the past month that required both over-the-air software fixes and some vehicles to be returned for maintenance. A recent fatal crash involving a Model Y that killed two people has again sparked discussion of Tesla’s safety record.

Follow HT Tech for the latest tech news and reviews , also keep up with us on Twitter, Facebook, , and Instagram. For our latest videos, subscribe to our YouTube channel.

First Published Date: 06 Dec, 02:33 IST
Tags:
NEXT ARTICLE BEGINS