Tesla has cut production of its best-selling Model Y at its Shanghai factory by double digits since March, according to industry data and people familiar with the matter, Reuters reported.
People familiar with the matter revealed that as Tesla's largest manufacturing center in the world, Tesla's Shanghai factory plans to cut Model Y production by at least 20% between March and June.
The move is aimed at addressing weak demand for Tesla Model Y in the Chinese market.
Tesla Shanghai Factory
China is Tesla's second-largest market, with most of the cars produced at Tesla's Shanghai factory sold in China. A brutal price war has broken out in China's electric vehicle market amid a slowing economy.
Data from the China Association of Automobile Manufacturers showed that Model Y production in China was 49,498 units in March and 36,610 units in April, down 17.7% and 33% year-on-year respectively.
Data from the China Association of Automobile Manufacturers showed that in the first four months of this year, Tesla produced a total of 287,359 Model Y and Model 3 vehicles in China, a 5% decrease from the same period in 2023, but Model 3 production increased by 10% during the same period.
It is unclear whether Tesla's Shanghai factory production cuts will be extended to the second half of this year or further affect the Model 3, and whether Tesla's factories in the United States and Germany have also taken similar production cuts.
Another person familiar with the matter said that despite Tesla's cuts in production at its Shanghai factory and recent layoffs in its sales and charging service teams in China, the company still hopes to sell 600,000 to 700,000 electric vehicles in China and 2 million electric vehicles worldwide in 2024, unchanged from the goals at the beginning of the year.
Tesla did not respond to a request for comment.
In April this year, Tesla lowered the price of Model Y in China to the lowest level since the model was launched in the country, while offering a "0 down payment/0 interest" purchase plan for Model 3 buyers to boost sales.
According to data released by the China Passenger Car Association, in the first four months of this year, Tesla's share of China's pure electric vehicle and plug-in hybrid vehicle market has dropped to 6.8% from 7.8% in the whole of 2023. It is reported that Tesla sold 603,664 vehicles in China in 2023.
Meanwhile, BYD's share of this segment in China fell to 34.3% in the full year of 2023 from 35%.
Tesla’s 2023 impact report omitted a goal to deliver 20 million vehicles a year by 2030, another sign that the company, which has been betting on artificial intelligence as a new revenue driver, is shifting its focus toward robotaxis.
