While Tesla’s situation in China is quite worrying, the Shanghai factory has been idling for several weeks. And this should continue in January, when it is rumored that it will even close its doors for several days. We take stock of the situation.
If Tesla is doing very well in Europe, while the Model Y has dominated the ranking of the best-selling models since the beginning of the year, all is not rosy for the American manufacturer. Indeed, for several months already, its situation in China has been rather worrying, while demand is in freefall, as well as sales. So much so that it now has a large stock of new cars to sell and that the manufacturer must grant large discounts as well as the return of the sponsorship program.
Paused production?
However, the Model Y was the second best-selling vehicle in China last November, while over 100,291 cars left its factory in Shanghai. A record for this site, which would be the most productive of the brand. If all of Tesla’s assembly lines are running at full speed to allow it to beat its record with one million cars delivered by the end of the year, a small grain of sand is stopping the machine.
Indeed, on December 24, the American agency Reuters announced that Tesla was going to suspend production at its Gigafactory in Shanghai. A statement correlated with the information ofAutomotive Newswhich announced at the beginning of the month a reduction in the length of shifts for employees of the Chinese factory, as well asa hiring freeze. Otherwise, Bloomberg announced a 20% reduction in Model Y production.
All this obviously does not bode well for the brand, which is also struggling to sell its cars in the United States despite great discounts. And it doesn’t seem about to get better, as Reuters announcement a pause in production at the Shanghai factory from January 20 to 31. Dates that correspond to the celebrations of the Chinese New Year. The site should run for only 17 days in January, from the 3rd to the 19th, citing an internal company source.
For his part, a spokesperson for the brand wanted to deny this information, via the media Caijing.com. According to Tesla’s Chinese division, this break would be shorter, then running from January 21 to 28. It would allow employees to be at home for the holidays, but would have nothing to do with the economic situation of the manufacturer. Especially since it specifies that ” during this period, some workshops still need to keep running at high speed“.
A worrying situation
If Tesla wants to be reassuring, this statement confirms that the plant will be idling during this period. This therefore means that it does not need to produce at a high rate, which seems to indicate to us that demand is relatively low. And for good reason, an article by Capital revealed to us that last November, new car sales fell 9.2% in Chinawhile exports soared 56% over the same period compared to last year.
Many cars are then sold in Europe, while 20% of the cars marketed here are manufactured in the Middle Kingdom. Is Tesla reducing its Chinese production to focus on Europe? It’s entirely possible. According to an expert quoted by Teslarati at the beginning of the month, the acceleration of the pace of the Berlin factory for the production of the Model Y would be the cause of the slowdown of the assemblies of the SUV in China. While the SUV is doing very well in Europe, becoming the best-selling electric model in Novemberit has every interest in being manufactured on site.
Especially since the government plans to remove the ecological bonus for all cars not assembled on the Old Continent, such as the Model 3. Tesla must therefore run its German factory at full speed to flood the European market. What it is doing precisely, while the Gigafactory has just broken a new production record. Other manufacturers are also adopting this strategy, like BYD, which will also build factories on European soil.
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