In addition to shortening shifts, the onboarding process for some new employees at Tesla's Shanghai plant has been suspended, according to Bloomberg.
(Image: Tesla China video screenshot)
Tesla (NASDAQ: TSLA) will shorten production shifts at its Shanghai plant as soon as Monday, adding to signs that the demand for the company's vehicles in China is not meeting expectations, Bloomberg said in a report today.
The plant will operate two 9.5-hour shifts a day, down from the current two 11.5-hour shifts, and will result in a reduction in monthly pay for production staff, the report said, citing people familiar with the matter.
The shorter shifts at the Shanghai plant won't necessarily be immediately reflected in monthly deliveries because the company still has some inventory on hand, one of the people said.
Tesla may need to cut prices further in China in the coming year as it increasingly appears to have a demand issue, the report quoted Toni Sacconaghi Jr. an analyst at Sanford C Bernstein & Co, as saying in a note this week.
In addition to shorter shifts, the onboarding process for some new employees at Tesla's Shanghai plant has been suspended, according to Bloomberg.
Some production staffers who were scheduled to start in November, including those on Tesla's battery workshops and car assembly lines, have been told by the company that their start dates will be delayed.
One of them said Tesla recruiters told them to prepare to start after the Chinese New Year holiday in late January because there is no immediate need for more workers.
Tesla upgraded the production lines at its Shanghai plant in July and August, allowing annual capacity to increase to about 1.1 million vehicles, according to multiple media reports previously.
However, the demand Tesla faces from Chinese consumers does not appear to have grown with the significant increase in capacity.
In October, Tesla's Shanghai plant produced 87,706 Model 3s and Model Ys but delivered 71,704, leaving a gap of 16,002 China-made cars in inventory, a Reuters report on November 9 said, citing data from China Merchants Bank International (CMBI).
That's the biggest gap between production and sales since Tesla's Shanghai plant opened in late 2019, the brokerage's data showed.
Tesla cut the prices of its full range of Model 3 and Model Y models in China on October 24 and later offered new incentives, including an additional RMB 6,000 discount for consumers who buy inventory cars starting December 7.
On December 5, Reuters and Bloomberg reported that Tesla planned to reduce production at its Shanghai plant by more than 20 percent as demand did not meet expectations.
Tesla delivered 62,493 vehicles in China in November and its Shanghai plant exported 37,798 vehicles, according to data released earlier today by the China Passenger Car Association (CPCA).
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