Tesla Inc plans to reduce production at its Shanghai factory, sources familiar with the matter said on Dec 5. The move is another sign that demand in China is not living up to Tesla's expectations.
Tesla's cuts could take effect as soon as this week, according to people familiar with the matter. They predicted thatThe move is likely to cut output at the Shanghai plant by about 20 per cent this month.
Tesla's decision comes after reviewing its recent performance in the domestic market. Tesla has the flexibility to increase production if demand increases. Tesla declined to comment.
The production cut is the first time Tesla has voluntarily reduced production at its Shanghai plant, where previous cuts were caused by the pandemic or supply chain disruptions.
But Tesla's recent incentives, including price cuts and increased insurance subsidies, as well as shorter delivery times, suggest that supply is outstripping demand after the Shanghai factory upgrade. Upgrades at the Shanghai plant have doubled capacity to about 1m vehicles a year.
At the same time, Tesla is facing growing competition in China from local automakers.