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Tesla’s Shanghai factory is reportedly reducing its production output, amid increasing competition from the Chinese electric vehicle (EV) industry.
Bloomberg reports employees in Tesla’s sole Chinese factory have been told to decrease production of the Model Y SUV and Model 3 sedan, with the plant now operating for five days a week rather than the existing six-and-a-half day regime.
The publication’s sources added the battery production facilities will be affected by longer suspensions, while some of Tesla’s suppliers have also reportedly been told to prepare for reduced output during April.
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Tesla’s Shanghai factory
While EV sales in China increased by 37.5 per cent in January and February 2024 compared to the same months a year ago, Tesla reportedly recorded a 6 per cent drop across the same period.
It’s understood the growing EV industry in China – which has seen a plethora of new brands enter the market in recent years – is behind Tesla’s sales decline, as the US giant can’t match the pricing of its rivals despite recent price cuts.
According to data from China’s Passenger Car Association, approximately 53 per cent of Tesla’s EVs produced in the Shanghai factory are sold in China, with the remaining 47 per cent exported – including to Australia.
It is not yet known whether the production slowdown will impact Australian deliveries, as both the Model Y and Model 3 – the brand’s only two vehicles sold locally – are exclusively produced for our market in China.
Though Tesla’s Australian sales have been down in the opening two months of the year compared to 2023 – recording 6772 sales in 2024, compared to 6829 the year prior – this has been attributed to shipping delays.
In January, Tesla recorded its lowest sales result since July 2022, largely due to a stop-sale for the Model 3 following a compliance issue.
Tesla also recently had to turn a ship of Model Ys and Model 3s back to China after stink bugs were discovered onboard.
Last month, sales of the Model 3 and Model Y rebounded to 34.5 per cent and 145.2 per cent above the same month in 2023.
Despite its stumble in the first month of the year, Tesla has regained the lead in Australia’s EV sales race from Chinese brand BYD, which has sold 2859 cars locally to the end of February – a 175 per cent increase on the year prior.
MORE: Everything Tesla
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