Exclusive Tesla will have a lower output in Shanghai in January according to the plan

  • 27-December-2022

An internal schedule reviewed by Reuters indicates that Tesla intends to run a reduced production schedule at its Shanghai plant in January, extending the reduced output it began this month into the following year.

According to the plan that Reuters saw, Tesla will run production for 17 days in January, from January 3 to January 19, and will stop producing electric vehicles from January 20 to January 31 for a long break for Chinese New Year.

In its output plan, Tesla didn't say why production was slowing down. During the scheduled downtime, it was also unclear whether work on the Model 3 and Model Y would continue outside of the plant's assembly lines. It is not standard procedure for Tesla to suspend operations for an extended period of time in celebration of Chinese New Year.

Reuters inquired for more information, but Tesla did not immediately respond.

On Tuesday, Tesla shares fell nearly 8% to their lowest level in over two years. Since the beginning of October, investors have cited concerns about demand, including from China, Chief Executive Elon Musk's involvement in Twitter, and his recent sales of Tesla shares, as reasons for the stock's decline.

According to Reuters, Tesla pushed back an established plan to halt the majority of work at its Shanghai facility in the final week of December by suspending production on Saturday.

After China abandoned its zero-COVID policy earlier this month, Tesla's most recent production cuts at Shanghai occur amid a rising infection rate. That move has been invited by organizations despite the fact that it has upset assembling activities outside Tesla.

Tesla, like other automakers, has had to deal with a decline in demand in China, the largest auto market in the world. Tesla offered an additional incentive earlier this month to customers who purchased vehicles in December. In addition to providing a subsidy for the cost of insurance, the company has reduced the prices of Model 3 and Model Y automobiles in China by up to 9%.

According to a report released on Tuesday by brokerage China Merchants Bank International (CMBI), Tesla's average daily retail sales in China from December 1 through December 25 were down 28% from a year earlier. It stated that Tesla had 36,533 retail sales in China between December 1 and December 25.

According to the brokerage, which uses week-by-week retail auto sales data in China as a snapshot of demand, industry-wide sales were up almost 15 percent by the same metric up until December 25. It said normal day to day deals for BYD, Tesla's bigger electric vehicle rival in China, were up 93% in that period.

During the final week of December of the previous year, Tesla's Shanghai factory, Musk's electric vehicle company's most important manufacturing hub, maintained normal operations while taking a three-day break for Chinese New Year.

For Chinese New Year in 2023, there will be a public holiday from January 21 to January 27.

The complex that is Tesla's Shanghai plant has approximately 20,000 employees. during the first three quarters of 2022, accounted for more than half of Tesla's output.

In 2022, Tesla intends to increase production and deliveries of electric vehicles by 50%. Based on forecasts for the soon-to-be-ended fourth quarter, analysts anticipate that output will fall short of that target by closer to 45 percent.

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