Tesla drastically cut Model Y production at its Shanghai plant. Despite this, Tesla continues to maintain its year-round sales target.
Tesla's (TSLA.O) Shanghai plant has cut production of its best-selling Model Y electric car by double digits since March, according to industry data and a source familiar with the matter.
China is Tesla's second-largest market. Most cars produced at the Shanghai factory are sold to China, and in the face of the economic slowdown, a fierce price war between electric vehicle manufacturers has begun.
The source, who asked for anonymity, said that as Tesla's largest manufacturing center in the world, the Shanghai factory plans to cut Model Y production by at least 20% between March and June.
According to data from the China Association of Automobile Manufacturers (CAAM), Model Y production in China was 49,498 units in March and 36,610 units in April, down 17.7% and 33%, respectively, from the same period last year.
According to CAAM data, Tesla produced a total of 287,359 Model Y and Model 3 vehicles in China in the first four months of this year, a decrease of 5% compared to the same period in 2023, with Model 3 production increasing by 10%.
It's unclear whether this production cut will continue into the second half of this year, or whether it will affect Model 3 models, and whether Tesla's US and German factories have taken similar production cuts.
Tesla did not mention its goal of delivering 20 million cars by 2030 in its latest impact report, which is another sign that the company is shifting its focus to robo-taxis. Tesla is speeding up its bets on AI breakthroughs to bring in new revenue growth.
An independent source said that despite Tesla's production cuts and recent layoffs in China's sales and charging service teams, the company still plans to sell 600,000 to 700,000 vehicles in China in 2024, while its global sales target for electric vehicles is 2 million units, which is the same as the target at the beginning of the year.
In April, Tesla lowered the price of the Model Y in the Chinese market to the lowest level since the model was first introduced in China in 2021, while providing a zero-interest financing plan for Model 3 buyers to boost sales.
According to data from the China Passenger Vehicle Association, Tesla's share of the pure electric and plug-in hybrid vehicle market in China fell to 6.8% in the first four months of this year from 7.8% in 2023, when Tesla sold 603,664 vehicles in China.