According to an internal timetable examined by Reuters, Tesla (TSLA.O) intends to operate a restricted production schedule at its Shanghai facility in January, extending the decreased output it began this month into next year.
According to the timetable seen by Reuters, Tesla would produce electric vehicles for 17 days in January, from Jan. 3 to Jan. 19, and then suspend production for a longer break for the Chinese New Year from Jan. 20 to Jan. 31.
In its output forecast, Tesla did not give an explanation for the manufacturing slowdown. It was also unclear if production at the factory would continue while the Model 3 and Model Y manufacturing lines were shut down. For the Chinese New Year, Tesla has not made it a standard habit to shut down for a prolonged amount of time.
In premarket trade, Tesla shares were down 5.8% at $116. Investors’ worries regarding demand, notably those from China, as well as the uncertainty surrounding Chief Executive Elon Musk’s role in Twitter and his recent Tesla share sales have contributed to the stock’s 56% decline since the beginning of October.
According to Reuters, Tesla pulled ahead of a predetermined plan to halt the majority of operations at the factory in the final week of December and stopped production at its Shanghai plant on Saturday.
Tesla’s most recent production reductions in Shanghai came amid an uptick in infections following China’s earlier this month decision to abandon its zero-COVID policy. Even though it has interfered with production activities outside of Tesla, the move has been welcomed by companies.
In China, the biggest car market in the world, Tesla has also experienced a decline in demand, much like other automakers. Tesla provided an extra incentive earlier this month for purchasers taking ownership of vehicles in December. In China, the business has reduced the cost of the Model 3 and Model Y automobiles by up to 9% in addition to providing insurance cost subsidies.
Brokerage In a research released on Tuesday, China Merchants Bank International (CMBI) stated that Tesla’s average daily retail sales in China from December 1 through December 25 were down 28% from a year earlier. Tesla reportedly made 36,533 retail sales in China between December 1 and December 25.
The brokerage said that industry-wide sales were up about 15% by the same metric through December 25. The company analyzes week-by-week retail vehicle sales data in China as a snapshot of demand. According to the report, BYD (002594.SZ), a major electric car rival of Tesla in China, had a 93% increase in average daily sales during that time.
The most significant center of production for Musk’s electric car firm, Tesla’s Shanghai facility, ran normally throughout the final week of December 2017 before taking a three-day holiday for Chinese New Year.
In 2023, China will have a public holiday from January 21 to January 27 in honor of Chinese New Year.
The complex housing the Tesla facility in Shanghai, which has 20,000 employees. In the first three quarters of 2022, this segment accounted for more than half of Tesla’s production.
Tesla has set a goal for 2022 that calls for a 50% increase in output and electric car deliveries. Based on projections for the soon-to-end fourth quarter, analysts anticipate that output will fall short of that target by closer to roughly 45%.