Tesla is laying off some Giga Shanghai workers from the battery manufacturing line, just a day after automakers in China collectively agreed to maintain a fair market order amidst a raging price war.

The US automaker began notifying battery assembly line employees earlier this week, as per people familiar with the matter, reported Bloomberg. Tesla did not permit the employees to speak publicly, and hence they requested anonymity.

The exact reason behind the layoffs is unclear, and there’s no indication of how many workers were let go. The report states Tesla offered some workers the option to transfer to different workshops such as stamping, painting, or general assembly.

Tesla CEO Elon Musk was in China at the Giga Shanghai in June 2023, where he raved about positive energy and the drive to get things done. Later, he also thanked Giga Shanghai workers in a Tweet, for their “excellent work overcoming many obstacles over many years.”

The facility is one of Tesla’s largest factories globally, with 20,000 staff and a capacity to roll out about one million electric cars annually. It’s the centerpiece of the company’s global operations, as over half of all Teslas sold worldwide were manufactured in Giga Shanghai.

What’s more, the battery modules from LG Energy Solution Ltd. and CATL that go into variants of the Model 3 and Model Y are assembled at the Giga Shanghai battery workshop. Tesla will reportedly incorporate automated machinery on the battery line, which could be a reason for the reduction of human labor.

Its expansion plans at Gigafactory Shanghai made headlines recently, as the brand looked into increasing powertrain production capacity and adding a new battery production line at a nearby field. But those plans hit a bureaucratic roadblock after concerns of oversupply and the effects of the price war.

Gallery: Tesla Giga Shanghai (Tesla Gigafactory 3)

Giga Shanghai’s Q2 2023 output hit a new record in China after the brand sold 247,217 units between April and June 2023. The company also set a new quarterly record for global sales after selling a combined 466,140 units of the Model 3, Model Y, Model S, and Model X.

Part of the sales growth can be attributed to the aggressive price cuts that started early this year, causing turmoil in the Chinese car market. Yesterday, 16 brands, including Tesla, signed a pledge to restore a fair market framework.

Got a tip for us? Email: tips@insideevs.com