Tesla cuts Model Y production in Shanghai by at least 20% in Mar-Jun, report says

The production cut is aimed at addressing weakening demand for Tesla's aged model in China, Reuters said.

(File photo shows a Model Y on display in a Tesla showroom. Image credit: CnEVPost)

Tesla's (NASDAQ: TSLA) Shanghai factory planned to cut Model Y production by at least 20 percent between March and June, Reuters said in a report today, citing a person familiar with the matter.

It's unclear whether the production cut will extend into the second half of this year or the Model 3, and whether Tesla's factories in the US and Germany are taking similar cuts, the report noted.

The Shanghai factory is Tesla's largest in the world, with an annual capacity of more than 950,000 vehicles, producing the Model 3 sedan and Model Y crossover.

Join us on or

The production cut is aimed at addressing weakening demand for Tesla's aged model in China, the Reuters report said.

China's Model Y production in March and April was 49,498 and 36,610 units, respectively, down 17.7 percent and 33 percent year-on-year, the report said, citing data from the China Association of Automobile Manufacturers (CAAM).

Despite production cuts and layoffs in Tesla's sales and charging service teams in China, the company still aims to sell between 600,000 and 700,000 vehicles in the country in 2024, while its global EV sales target of 2 million is unchanged from the beginning of the year, Reuters said, citing another source.

Tesla began a plan to cut more than 10 percent of its global workforce in the middle of last month, with the China team being hit.

In 2023, Tesla sold 603,664 vehicles in China, up 37.27 percent from 439,770 in 2022, according to the China Passenger Car Association (CPCA).

Model Y and Model 3 sales in China in 2023 were 456,394 vehicles and 147,270 vehicles respectively, up 44.74 percent and 18.33 percent year-on-year.

In January-April this year, Tesla sold 163,841 vehicles in China, down 7.64 percent year-on-year, according to the CPCA.

The Model Y sold 126,722 vehicles in China in January-April, and the Model 3 37,119 vehicles, according to data compiled by CnEVPost.

Unlike local EV makers who have been quick to roll out a slew of new models, Tesla's models have been older, albeit with minor updates over the past year.

On April 21, Tesla cut the prices of all models available in China, including the locally produced Model 3 and Model Y, and the imported Model S and Model X, all by RMB 14,000 ($1,930) in response to the fierce price war.