Tesla cuts Shanghai factory production plan for December – sources

SHANGHAI, Dec 5 (Reuters) – Tesla (TSLA.O) plans to cut December production of the Model Y at its Shanghai plant by more than 20 percent from the previous month, two people familiar with the electric vehicle maker’s production plan said on Monday.

The planned production cut comes after Tesla reported record sales in China for November.

The production cut was first reported by Bloomberg, which said the move was a reflection of weak demand.

Reuters was unable to determine the reason for the planned production cuts at the Shanghai factory, Tesla’s largest production hub.

A Tesla representative did not initially respond to a Reuters request for comment.

Late Monday, a Tesla representative responded with “fake news” without elaborating. The spokesman did not respond to questions from Reuters about whether Tesla was denying there was a production cut or whether the move was related to weaker demand.

Tesla shares were down 2.1 percent in premarket trading in New York, following earlier lows following the company’s announcement.

Inventory levels at Tesla’s Shanghai plant rose sharply after it completed an upgrade of production facilities over the summer, with electric vehicle inventories rising at their fastest pace in October.

The U.S. automaker cut prices of Model 3 and Model Y cars by up to 9 percent in China and offered insurance incentives that helped boost November sales of its China-made cars by 40 percent from October and up 89.7 percent compared to a year earlier.

Tesla delivered 100,291 EVs made in China in November, the highest monthly sales since the opening of the Shanghai factory in late 2020, Xinhua reported on Monday, citing Tesla.

The company’s high inventory levels in Shanghai come as China’s auto market faces slowing demand and disruptions to local supply chains.

Uncertainty over when China will take significant steps to ease its “dynamic zero-COVID” strategy has clouded the outlook for the world’s biggest auto market, although some Chinese cities have taken steps to ease some restrictions following protests in recent weeks.

WorldwideTesla planned to push production of Model Y and Model 3 EVs sharply higher in the fourth quarter as newer factories in Austin, Texas and Berlin ramp up production, Reuters reported in September.

The automaker plans to begin production of a updated version of model 3 in the third quarter of 2023 in Shanghai as it aims to lower production costs and boost the appeal of the five-year-old electric sedan, Reuters reported.

Reporting by Zhang Yang and Brenda Guo; Editing by Kim Cohill, Kenneth Maxwell, Simon Cameron-Moore and Susan Fenton

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