Tesla cuts Model Y output in China

The slowdown in demand for EVs has seriously impacted Tesla’s business. To combat the challenging situation, the carmaker cut prices in the main markets and slashed production.

Reuters reports that Tesla planned to reduce the production of the Model Y at Gigafactory Shanghai in China by at least 20 per cent between March and June. According to China Association of Automobile Manufacturers (CAAM) data, the company manufactured 49,498 units of the Model Y in March and 36,610 units in April. Compared to the same months in 2023, these figures marked a decline of 17.7% and 33%, respectively.

Tesla manufactures the Model Y crossover and the Model 3 sedan at Gigafactory Shanghai. Combined production of these cars from January to April was down 5% year-over-year – 287,359 units. The decline was affected by the cutdown in the Model Y production, as the Model 3’s output was 10% higher. It is worth noting here that the Model 3 received a refresh in August 2023, so it’s normal for demand and production to spike.

Slowing demand for EVs isn’t the only issue automakers face in China. A brutal price war could significantly erode their profit margins. Xiaomi entering the auto market with the SU7 at a shockingly low base price in March further intensified the situation.

According to Reuters, Tesla’s market share in China’s new energy vehicles, which include plug-in hybrid electric models as well, declined 6.8% year-over-year to 603,664 units in the first four months of 2024. The company still expects to sell 600,000-700,000 EVs in China this year, and that’d be a sizable chunk of its global annual sales, for which it has set a target of two million units.

In April, Tesla reduced the Model Y’s prices in China to a record low since its launch in 2021. As for the Model 3 sedan, an interest-free financing scheme was its chosen incentive to save it from the various external factors that could weaken its demand despite the comprehensive update in August 2023.

Currently, the Tesla Model Y prices in China range from 249,900 yuan (31,802 euros) to 354,900 yuan (45,164 euros). The Tesla Model 3 starts at 231,900 yuan (29,511 euros) and goes up to 335,900 yuan (42,746 euros).

reuters.com