Tesla (TSLA) has reportedly reduced its electric vehicle output at the Giga Shanghai factory in China, according to Bloomberg, the reductions can be attributed to slow growth in the sales of green-energy vehicles, intense competition, and a fierce pricing war.
The company has modified its employees' work schedule, changing it from six and a half to five days per week to slow down the production of its Model Y SUV and Model 3 sedan.
Previously, the Shanghai factory, recognized as the world's biggest all-electric automobile factory, contributed to approximately half of Tesla's worldwide sales. The plant's annual production exceeded 950,000 electric vehicles, as reported in the company's 2023 fourth-quarter report.
In February, Tesla's production quantity in China fell by 19% to 60,365 units. During the first two months of 2024, the company supplied 131,812 vehicles, reflecting a decline of 6% compared to the previous year. Interestingly, only 53% of these vehicles were sold domestically, despite introducing price reductions.
Tesla also curtailed the manufacturing of electric vehicle parts, including battery production lines, and even notified several suppliers to prepare for prolonged production restrictions through April. The month of April is typically slower in the Chinese market due to the observation of Tomb Sweeping Day.
The company is also experiencing fierce competition from domestic automakers, such as BYD, that provide cheaper and more technologically advanced vehicles to customers.
Moreover, Tesla is encountering similar demand issues in the U.S. and Europe.
