Tesla to suspend Shanghai Model Y production until end of December

The suspension of assembly at the end of this month will be part of a planned production cut of about 30% for the month at the Shanghai factory of Tesla’s best-selling car, the Model Y, two people familiar with the matter said.

As the most important manufacturing center of Elon Musk’s electric car company, the Shanghai factory has been operating normally in the last week of December last year.

Year-end holiday shutdowns are not yet customary, two people familiar with the matter said.

Tesla did not immediately respond to a request for comment.

According to the memo, Tesla aims to produce a little more than 20,000 Model Y vehicles in the last three weeks of December, including the week of the shutdown.

By comparison, Tesla kept Model Y production at about 13,000 a week in November, or 39,000 over a three-week period, people familiar with the matter said.

It’s unclear how and if Model 3 production will be affected by the Model Y’s planned shutdown in the last week of the month. Model Y represents the largest production share of the Shanghai factory.

Reuters reported on Monday that Tesla plans to cut production of the Model Y at its Shanghai factory by more than 20% in December, starting in November. A Tesla representative said at the time that the news, first reported by Bloomberg, was “false,” without elaborating.

Reuters could not ascertain why the Shanghai factory planned to cut production or close at the end of the year.

The company’s China operations have been grappling with rising inventory levels after the Shanghai factory completed an upgrade of its production facilities over the summer.

Brokerage data showed Tesla added to its electric vehicle inventory in October at the fastest pace on record for Shanghai operations.

Since then, Tesla has been cutting prices and offering incentives to Chinese buyers. It posted record sales for November in China. On Wednesday, it offered Chinese buyers a limited-time discount of 6,000 yuan ($860) on some models until the end of 2022.

Tesla delivered 100,291 electric vehicles made in China in November, the highest monthly sales volume since its Shanghai factory opened in late 2020, Xinhua reported on Monday, citing Tesla.

Despite Beijing’s sharp easing of its zero-COVID policy this week, an auto industry body said Thursday that demand is weakening faster than expected. Chinese passenger car sales fell in November for the first time in six months. The auto industry group said it expects sales to be flat next year in the world’s largest auto market, Tesla’s second largest after the United States.

Globally, Tesla plans to significantly ramp up production of its Model Y and Model 3 electric vehicles in the fourth quarter as production ramps up at new factories in Austin, Texas, and Berlin, Reuters reported in September.

The automaker plans to start production of a revamped Model 3 in Shanghai in the third quarter of 2023, Reuters reported last month, with the aim of reducing production costs and boosting the appeal of the five-year-old electric sedan.

First published date: December 9, 2022 at 17:25 PM CST