Report: Tesla Cuts Back Production at Its Biggest EV Plant in China

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Report: Tesla Cuts Back Production at Its Biggest EV Plant in China

Tesla is feeling the heat in China due to market instability and cutthroat competition. Reports from Bloomberg and CnEVPost reveal that Tesla has dialed back production at its Giga Shanghai facility, reacting to slow growth and a price war in the region. This move, based on insights from sources in the know, marks a shift from the factory’s usual operation of 6.5 days a week to just 5, though it will maintain its dual 11.5-hour shifts daily.

Giga Shanghai isn’t just any plant; it’s the largest electric vehicle manufacturing site globally, previously accounting for about half of Tesla’s worldwide sales. As per Tesla’s fourth-quarter report in 2023, this factory’s annual production capability exceeds 950,000 electric vehicles, contributing significantly to Tesla’s overall capacity of 2.35 million EVs.

Moreover, the slowdown isn’t limited to assembly lines alone. The ripple effects are hitting the supply chain, with Tesla reducing operations in certain workshops and advising suppliers to brace for continued production cuts into April. This adjustment comes as consumer spending in China typically slows in April, coinciding with the Tomb Sweeping Day, a period known for lower consumption rates.

Tesla witnessed a 19% drop in its China-made EV sales to 60,365 units in February, suggesting a possible decrease in demand that might extend into March. Reports from China indicate that Tesla will raise the Model Y’s price by 5,000 CNY (nearly $700) starting April 1, aligning with price adjustments in the U.S. and other markets. This increase coincides with the end of an insurance subsidy and a discount on certain paint colors. Meanwhile, BYD, China’s top EV manufacturer, also saw a sales dip in February and is updating its models and reducing prices in response.

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