According to industry data and an insider, Tesla (TSLA.O) has reduced production of its popular Model Y electric car by a double-digit percentage at its Shanghai facility since March. This adjustment is a response to declining demand for the aging model in China, its second-largest market. The majority of vehicles produced at the Shanghai plant are sold within China, where fierce price competition among electric vehicle manufacturers has intensified amid an economic slowdown.
The Shanghai plant, Tesla’s largest manufacturing hub worldwide, reportedly planned to cut Model Y output by at least 20% from March to June, as per the insider, who requested anonymity due to the sensitivity of the matter.
Data from the China Association of Automobile Manufacturers (CAAM) indicates that Model Y production in China declined to 49,498 units in March and further to 36,610 units in April, representing year-on-year decreases of 17.7% and 33%, respectively.
In total, Tesla manufactured 287,359 units of Model Y and Model 3 cars in China in the first four months, a 5% decrease compared to the same period last year. Model 3 output saw a 10% increase, according to CAAM data.
It remains unclear whether the production cut will extend to the second half of the year or affect Model 3 production. Additionally, it’s uncertain if Tesla’s U.S. and German plants have implemented similar production cuts. Tesla did not respond to requests for comment.
In its latest impact report published on Thursday, Tesla omitted a significant goal of delivering 20 million vehicles annually by 2030. This omission suggests a shift away from electric cars as the company focuses more on robotaxis and accelerates efforts in artificial intelligence for revenue growth.
Despite the production adjustments and recent layoffs within Tesla’s China sales and charging service teams, the company reportedly maintains its target to sell 600,000 to 700,000 cars in China in 2024, out of its global aim of 2 million EVs. This information comes from another source who wished to remain anonymous.
