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Tesla to restrict production in Shanghai facility from January

by Joy Onuorah
December 27, 2022
in Business, featured
Reading Time: 2 mins read
Tesla to restrict production in Shanghai facility from January

Tesla to restrict production in Shanghai facility from January

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An internal timetable accessed by Reuters, has shown that Tesla intends to run a restricted production schedule at its Shanghai facility in January, extending the decreased output it began this month into next year.

According to the plan seen by Reuters, Tesla would produce electric vehicles for 17 days in January, from Jan. 3 to Jan. 19, and then suspend production for a longer break for Chinese New Year from Jan. 20 to Jan. 31.

In its output forecast, Tesla did not give an explanation for the production slowdown. It was also unclear whether production at the factory would continue while the Model 3 and Model Y manufacturing lines were shut down. For the Chinese New Year, Tesla has not made it a standard habit to shut down for a prolonged amount of time.

An inquiry for comment from Reuters did not receive a prompt response from Tesla.

In premarket trade, Tesla shares were down 5.8% at $116. Investors’ worries regarding demand, notably those from China, as well as the uncertainty surrounding Chief Executive Elon Musk’s role in Twitter and his recent Tesla share sales have contributed to the stock’s 56% decline since the beginning of October.

According to Reuters, Tesla halted production at its Shanghai plant on Saturday, advancing a predetermined schedule to halt the majority of activity at the unit in the final week of December.

Following China’s withdrawal from its zero-COVID policy earlier this month, the current production cuts by Tesla at their Shanghai facility coincide with an uptick in infections. Although it has affected manufacturing activities outside of Tesla, that decision has been well received by enterprises.

In China, the biggest auto market in the world, demand for Tesla vehicles has decreased, similar to that of other automakers. For buyers taking possession of vehicles in December, Tesla provided an additional incentive earlier this month. In addition to providing a rebate for insurance expenses, the business has reduced the pricing of the Model 3 and Model Y in China by up to 9%.

Brokerage In a research released on Tuesday, China Merchants Bank International (CMBI) stated that Tesla’s average daily retail sales in China from December 1 through December 25 were down 28% from a year earlier. Tesla reportedly made 36,533 retail sales in China between December 1 and December 25.

The brokerage reported that industry-wide sales were up about 15% by the same metric through December 25. The brokerage tracks week-by-week retail auto sales data in China as a snapshot of demand. According to the report, BYD (002594.SZ), a major electric vehicle rival of Tesla in China, saw a 93% increase in average daily sales during that time.

The most significant center of production for Musk’s electric vehicle company, Tesla’s Shanghai facility, ran normally during the final week of December 2017 before taking a three-day holiday for Chinese New Year.

In 2023, China will observe a public holiday from January 21 to January 27 in honor of Chinese New Year.

More than half of Tesla’s output in the first three quarters of 2022 came from its Shanghai plant, a complex with some 20,000 workers.

Tesla has set a goal for 2022 that calls for a 50% increase in output and electric vehicle deliveries. Based on projections for the soon-to-end fourth quarter, analysts anticipate that output will fall short of that target by closer to roughly 45%.

Tags: Tesla
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