Report: Tesla To Temporarily Suspend Model Y Production In Shanghai

According to Reuters, the pause will only be for the last week of December.

By: Mark Kane

Dec 10, 2022 at 2:41pm ET

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Tesla might slow down or even temporarily suspend some of its production lines at the Giga Shanghai plant in China this month.

According to Reuters, an internal memo, as well as input from two people with knowledge of the matter, indicates that the assembly of the Model Y will be suspended between December 25 and January 1.

The article says also that this move is a part of a planned cut of the Model Y production at the site by 30% this month to "over 20,000" units.

"Tesla is targeting production of just over 20,000 Model Y vehicles for the last three weeks of December combined, including the week of suspended output, according to the memo."

There is no official comment on whether such a production pause will really take place or what could be the reason, but Reuters notes that a year ago, there were no production cuts in the final week of December.

Meanwhile, November's sales results were a record high at over 100,000 units, partially thanks to very high local sales (but export was very strong as well).

It's not clear what is happening in China right now, but in October, Tesla lowered the prices of Made-in-China (MIC) Model 3 and Model Y by 5-9%. On top of that, there was an insurance-related incentive worth 4,000 yuan, plus some 6,000 yuan ($860) discounts introduced on November 7.

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With the end of the year, the 11,088 CNY (almost $1,600) subsidy will be gone (some MIC Tesla models were eligible for it). If we consider some new COVID-19 lockdowns/economic uncertainty as well as reportedly high MIC Tesla car inventory, one might think that Tesla wants simply to adjust its output to the new situation. We must also remember that the beginning of the year is usually a slower time in China due to holidays.

Another question is also the export potential because the European gigafactory in Germany is ramping up production of the Model Y. There might be no need for so many Model Ys from China as in the past.