Recent,$Tesla (TSLA.US)$Strategy adjustments in the Chinese market have attracted widespread attention within and outside the industry. Tesla's Shanghai factory has cut production of its best-selling Model Y electric vehicle by double-digit percentages since March, according to internal sources and industry data.

This move is Tesla's direct response to weakening demand in the Chinese market. As Tesla's second-largest market, China is critical to the American automaker. However, against the backdrop of the economic slowdown, a fierce price war broke out among electric vehicle manufacturers, and Tesla also had to reconsider its production strategy.

Tesla's Shanghai plant is the world's largest manufacturing center, and plans to cut Model Y production by at least 20% between March and June, according to people familiar with the matter, who asked not to be named. Data from the China Association of Automobile Manufacturers also supports this. Model Y production in March was 49,498 vehicles, while in April it fell to 36,610 units, down 17.7% and 33%, respectively, from the same period last year.

In the first four months of this year, Tesla produced a total of 287,359 Model Y and Model 3 cars in China, down 5% from the same period in 2023. Despite a 10% increase in Model 3 production, the overall decline in production is still significant.

Currently, it is unclear whether this production reduction strategy will continue until the second half of this year, or whether production of Model 3 will be extended, and whether Tesla's factories in the US and Germany will take similar measures. Tesla did not respond to this.

Another source revealed that despite recent layoffs from Tesla's sales and charging service team in China, the company plans to sell 600,000 to 700,000 electric vehicles in China in 2024. This target is in line with the global sales target of 2 million electric vehicles set at the beginning of the year.

To stimulate sales, Tesla lowered the price of the Model Y in the Chinese market to its lowest level since its launch in 2021 in April, and provided a zero-interest financing plan for Model 3 buyers.

However, according to data from the China Passenger Vehicle Market Information Association, Tesla's share of the overall pure electric and plug-in hybrid vehicle market in China has declined from 7.8% in the full year of 2023 to 6.8% in the first four months of this year. Meanwhile, local company BYD led with a market share of 34.3%, although this figure is slightly lower than 35% for the full year of 2023.

It is worth mentioning that on Thursday local time, Tesla released the “2023 Impact Report”, but the report did not mention the previously proposed annual sales target of eventually reaching 20 million vehicles. This sign suggests that Tesla is shifting its focus to autonomous taxis (Robotaxis) rather than just focusing on electric vehicles, indicating that the company is repositioning itself in the direction of future development.

Last month, Musk announced in a post on social media platform X: “Tesla will release Robotaxi products on August 8.” According to information, the product aims to use autonomous driving technology to enable Tesla vehicles to autonomously pick up passengers and collect fares. Musk previously predicted that autonomous taxis will be more common than human-driven cars in the future.

Editor/Jeffrey