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Tesla to Suspend Model Y Output in Shanghai

Tesla Inc. will halt Model Y assembly at its Shanghai plant between Dec. 25 and Jan. 1. The production of the Model Y, Tesla’s best-selling model, at the Shanghai facility will be reduced by around 30% in the month as a result of the suspension of assembly at the end of the month.

The Elon Musk electric vehicle company’s primary manufacturing facility, located in Shanghai, continued to operate normally throughout the final week of December of the previous year. It has not been customary for the plant to close down for a year-end holiday.

Image credits : Reuters

According to the document, Tesla expects to produce slightly more than 20,000 Model Y vehicles over the course of the final three weeks of December, not counting the week when production was halted. Contrarily, according to the sources, Tesla maintained its Model Y production at a weekly rate of roughly 13,000 vehicles in November, which amounted to 39,000 over a three-week period.

It was unclear whether and how the planned halt of the Model Y’s production during the last week of the month would effect output of the Model 3. The majority of the manufacturing at the Shanghai plant goes toward the Model Y.

Tesla planned to reduce Model Y production at its Shanghai plant by more than 20% in December compared to November. A Tesla representative had previously declared the news, which had been broken by Bloomberg first, to be “fake,” without going into further detail.

It was unable to ascertain the cause of the factory’s anticipated output cut or end-of-year closure in Shanghai. After the Shanghai facility upgraded its manufacturing facilities in the summer, the company’s China operations have struggled with high inventory levels. According to brokerage data, Tesla increased its electric vehicle inventory in October at the quickest rate ever seen for operations in Shanghai.

Since then, Tesla has lowered its rates and provided incentives to Chinese customers. In November, it saw record sales in China. It provided a temporary discount of 6,000 yuan ($860) on some models on Wednesday to customers in China till the end of 2022. According to Xinhua on Monday, citing Tesla, the company shipped 100,291 electric vehicles built in China in November, marking the greatest monthly sales since its Shanghai facility opened in late 2020.

Beijing significantly relaxed its zero-COVID policy this week, but a body representing the vehicle sector reported on Thursday that demand was declining more quickly as anticipated. In November, China’s sales of passenger cars dropped for the first time in six months. The largest car market in the world, which is also Tesla’s second-largest market after the United States, is expected to see flat sales in 2019, according to the auto industry organization.

According to a September report from Reuters, Tesla had intended to increase global production of the Model Y and Model 3 EVs considerably in the fourth quarter as newer plants in Austin, Texas, and Berlin ramp up production. The automaker intends to lower production costs and increase the desirability of the five-year-old electric sedan by putting a redesigned version of the Model 3 into production in Shanghai in the third quarter of 2023.