Tesla is facing problems in China and is apparently cutting production

Tesla factory in Shanghai

The carmaker only doubled capacity in the summer.

(Photo: IMAGO/Xinhua)

Dusseldorf In November saw the numbers for Tesla still brilliant in China: The US manufacturer sold a total of 100,239 vehicles manufactured there, around 90 percent more than in the previous year and an increase of almost 40 percent compared to the previous month.

However, bumps Tesla with its success apparently to its limits. Noisy reports from the news agencies Reuters and Bloomberg From Monday, the company will cut production at the Shanghai factory by up to 20 percent this week. A company spokesman declined to comment on the reports.

The move suggests that Tesla is preparing for an impending demand slump. “This is a worrying development,” says Matthias Schmidt, founder of the analysis company Schmidt Automotive. In China, the electric car subsidies would “phase out very slowly” at the end of the year. A drop in sales is therefore foreseeable. “The sales from 2023 will probably be brought forward to this year,” warns Schmidt.

According to experts, the Tesla plant in Shanghai is underutilized

This is a cut for Tesla boss Elon Musk, which has so far relied heavily on expansion and intends to sell around 1.4 million vehicles worldwide this year. In the history of the company, the carmaker has only cut production when external conditions such as the corona pandemic and lockdowns made necessary. Tesla shares were down around 2.7 percent premarket on Monday.

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Musk’s expansion of production in Shanghai also seems to be taking revenge. Tesla doubled the plant’s capacity to one million vehicles a year this summer. They are not all sold in the People’s Republic, but are also exported. In October, for example, more than 54,000 of the almost 72,000 cars produced in China were shipped abroad. The figures for November are not yet available.

However, the export is limited by transport capacities, the special ships have to be booked well in advance. According to analyst Junheng Li from JL Warren Capital, the Tesla factory in Shanghai is significantly underutilized, as she writes in a report. Instead of the possible 85,000 vehicles, she expects only 25,000 vehicles to be built each week in December.

Competition from Chinese suppliers is growing

Options are limited for Tesla. The subsidies on the Chinese market will not only expire at the end of the year. The competition with domestic providers such as BYD or Guangzhou automobiles intensifies. BYD sold significantly more than Tesla in November with around 114,000 electric vehicles. Also worried two callbacks in the past month and an accident with two fatalities for negative headlines at the US group.

Another indication of Tesla’s problems in China: Delivery times have been decreasing there for months. A year ago, Chinese customers had to wait up to five months for the Shanghai-made Model 3 and Y, now it’s only a few weeks.

Tesla reacted more than a month ago and cut prices in China by nine percent, there were other incentives such as cheaper insurance. The China Merchants Bank predicts a price war for electric cars for the coming year.

More: Tesla lowers prices in China – electric car market loses momentum

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