Tesla cuts Model Y production in Shanghai amid weak demand

Tesla has cut Model Y production by double-digit percentages at its Shanghai plant since March

Tesla cuts Model Y production in Shanghai amid weak demand
Tesla cuts Model Y production in Shanghai amid weak demand

Tesla has reduced the output of its best-selling Model Y electric car by double-digit percentages at its Shanghai plant since March.

As per Reuters, this move responds to declining demand in China, its second-largest market. The Shanghai facility, Tesla's largest manufacturing hub globally, has cut Model Y production by at least 20% from March to June.

Data from the China Association of Automobile Manufacturers (CAAM) showed that Model Y production in China was 49,498 units in March and 36,610 units in April, representing year-over-year decreases of 17.7% and 33%, respectively.

Overall, Tesla produced 287,359 Model Y and Model 3 vehicles in China during the first four months of 2024, a 5% decrease compared to the same period in 2023. 

While, Model 3 output increased by 10%, the decline in Model Y production highlights shifting demand dynamics.

It remains unclear whether the production reduction will extend into the second half of the year or affect Model 3 production and whether similar cuts are being implemented at Tesla’s plants in the United States and Germany.

However, Tesla has not responded to requests for comment.

Additionally, Tesla’s recent impact report omitted its goal of delivering 20 million vehicles annually by 2030, signaling a shift in focus towards robotaxis and leveraging artificial intelligence for future growth.

In April, Tesla reduced Model Y prices in China to their lowest levels since the model’s 2021 launch and introduced a zero-interest financing option for Model 3 buyers to stimulate sales.

Despite these measures and recent layoffs in its China sales and charging service teams, Tesla aims to sell between 600,000 to 700,000 vehicles in China in 2024, maintaining its initial global target of 2 million electric vehicles.