Summary
– Tesla is cutting production of the Model Y electric vehicle in China by around 20% at its Shanghai Gigafactory
– Model Y is Tesla’s best-selling electric car in China, accounting for 77% of its sales in the country
– The reduction in production is due to competition from Chinese rivals and a drop in Tesla’s market share in China
– Tesla has not officially confirmed the production cut, but data shows a decrease in Model Y production in March and April
– Tesla had aimed to sell over six lakh electric vehicles in China in 2024, but may revise its outlook due to the production reduction
Article
Tesla, the world’s largest electric vehicle manufacturer, has decided to reduce production of its Model Y electric vehicle by at least 20 per cent at its Shanghai Gigafactory in China. The Model Y is one of Tesla’s best-selling electric cars in China, with nearly 77 per cent of its sales in the country coming from this model. The decision to cut production comes amid stiff competition from Chinese rivals, prompting Tesla to engage in a price war to boost sales. Tesla also sells the Model 3 electric car in China, with production of this model reportedly increasing by 10 per cent during the same period.
Although Tesla has not officially confirmed the production cut, a Reuters report cited a source claiming that Model Y production in China has been reduced between March and June. Data from the China Association of Automobile Manufacturers showed that Model Y production fell to 49,498 units in March and 36,610 units in April. Despite this, Tesla has manufactured over 2.87 lakh electric cars in China, which is five per cent less compared to the same period last year. The report also noted a drop in Tesla’s market share in the first four months of the year, with competition from Chinese EV giants like BYD leading the segment.
In response to the drop in sales, Tesla recently slashed the price of the Model Y in China to its lowest since its debut in 2021 and offered zero-interest financing schemes on the Model 3 to boost sales. The company aims to sell more than six lakh electric vehicles in China in 2024, but reports of production cuts may prompt a revision of its annual outlook. Tesla has also scaled back its global ambition to sell 20 lakh electric cars in a year by 2030. The decision to reduce Model Y production in China reflects the challenges faced by Tesla in the competitive EV market, where local players have gained significant market share.
The Model Y is manufactured at Tesla’s Gigafactory in Shanghai, which is the second largest market for the EV maker outside the United States. The production cut for the Model Y comes at a time when Tesla is facing increased competition in the Chinese EV market, leading to a decline in its market share. Despite efforts to boost sales through price reductions and financing schemes, Tesla has seen its sales in China decrease, prompting a reevaluation of its production and sales targets. The report highlights the evolving dynamics of the electric vehicle market in China, where local players continue to challenge Tesla’s dominance.
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