Tesla has reportedly lowered its Model 3 and Model Y production output at Giga Shanghai on slower than expected demand for electric vehicles (EVs) in the fiercely competitive EV market in China.
According to a report from Bloomberg, citing sources familiar with the plans, Tesla has told its employees the working week at Giga Shanghai will be cut from 6.5 days down to 5. While the number of working days is being reduced, the shift lengths will be remaining the same with two daily 11.5 hour shifts, translating into about a 20% reduction in production output.
The reduction in the work week was reportedly made earlier this month, and employees have not been told when to expect production to resume back to normal.
While Tesla has not officially commented on report, it is believed the production cut was made on lower than expected demand in China as competition in the EV market in China intensifies.
Data from the China Passenger Car Association shows Tesla China sold 60,365 cars in February, a 19% drop compared to the same time period in 2023. This decline has happened despite Tesla cutting prices in China in January, as well as offering a number of incentives, like free paint upgrades, insurance subsidies, and more. Tesla has also warned of an impending price increase on the Model Y in China. That price increase is set to take affect on April 1, the first day of the second quarter, so the warning is seen as a way to entice customers to place their order before the end of the month and boost Q1 sales figures.
Tesla doesn’t only sell cars made at Giga Shanghai in China. The factory is also Tesla’s primary vehicle export hub, and in the first two months of the year 61,790 vehicles were shipped off to other countries, including Canada, down neraly 23% compared to same period last year.
