Tesla Falls on Plan to Cut Output of EVs at Shanghai Factory
Tesla Inc. plans to lower production at its Shanghai factory, according to people familiar with the matter, in the latest sign demand in China isn't meeting expectations. The company's shares fell in early trading.
The output cuts will take effect as soon as this week, said the people, who asked not to be identified because the information isn't public. They estimate the move could reduce production by about 20% from full capacity, which is the rate at which the factory ran in October and November.
The decision was made after the automaker evaluated its near-term performance in the domestic market, one of the people said, adding that there's flexibility to increase output if demand increases.
A Tesla representative in China said Tuesday that plans to cut output were “untrue,” declining to elaborate. Shanghai Securities News, citing unidentified people familiar with the company, reported late Monday the planned cut in the Chinese plant's production is “false information.”
The carmaker's shares fell 4.6% to $185.83 as of 9:58 a.m. in New York. The stock is down about 47% this year.
The trimming marks the first time Elon Musk's EV maker has voluntarily reduced production at its Shanghai plant, with previous reductions caused by the city's two-month Covid lockdown or supply chain snarls. Recent price cuts and incentives such as insurance subsidies, along with shorter delivery times, suggest demand has failed to keep up with supply after an upgrade doubled the plant's capacity to about 1 million cars a year.
Read more: Tesla Revamps China Marketing Strategy as Rivals Lure Customers
Tesla's China deliveries were a record 100,291 in November, China's Passenger Car Association said on Monday, as lead times for the Model 3 and Model Y
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