The automobile market has changed from the previous fuel-driven vehicles to the new energy vehicles as a result of technological advancement and the need to preserve the environment. In the field of new energy vehicles, not only are the sales figures updated frequently, but the brands are also being updated. A brand on the list will be dropped if you do not pay attention to the intense market competition.
But Tesla, which is regarded as the dominant force in the market for new energy vehicles, has consistently been able to rank among the top sales and has drawn a lot of attention. However, an internal memo from Tesla’s Shanghai Gigafactory states that from December 25 to January 1, 2023, the production of Model Y will be suspended.
We are all aware that decreased market demand and the need to modify the production schedule are the main causes of suspending production. What is happening here? Tesla’s response: It’s a rumor.
According to two people familiar with the situation, Tesla’s previously stated intention to reduce production by 30% includes the suspension of the Model Y. In the final three weeks of December, Tesla plans to produce just over 20,000 Model Y, according to the internal memo (including the last week of suspending production).
In contrast, the Shanghai Gigafactory’s production of Model Y in November remained consistent at around 13,000 vehicles per week, and 39,000 vehicles in three weeks. The final week of December saw normal business operations at Tesla’s Shanghai Gigafactory.
According to a Tesla insider, “That’s not true.” “Why suspend production? It’s a rumor.”
Multiple “rumors”? Oddly enough, there was also a “rumor” of a production cut on December 5. Bloomberg quotes people familiar with the situation as saying that “Tesla plans to cut production at its gigafactory in Shanghai due to weaker-than-expected demand.”
The reductions, which are expected to go into effect soon, could result in a 20% decrease in Model Y production at the Shanghai Gigafactory in December compared to November.
However, in response to media inquiries, Tesla later stated that the news is not true.
“Tesla will reduce the workers’ working hours of production line at the Shanghai Gigafactory as early as December 12, and the company has postponed the working time of some new employees,” according to several people familiar with the situation. Although claims of production cuts have not been verified, it is clear from these statements that production demand is not ideal.
According to some international media, Tesla’s recent price reductions and incentives could further show that market demand for its electric vehicles has not been as strong as anticipated.
In actuality, whether the aforementioned production cuts or suspension of production, one of the delivery performance has not met expectations. Tesla intends to deliver 50% more vehicles in 2022 compared to 2021 (about 936,000 vehicles).
Therefore, Tesla is expected to deliver more than 1.4 million vehicles this year across the globe. Maintaining the Chinese market’s expansion is particularly important for achieving this goal. It’s important to note that Tesla’s CFO — Zachary Kirkhorn stated the company anticipates full-year delivery growth of slightly less than 50% this year.
Although deliveries did not meet theis expectations, Tesla did not need to suspend production. Because Tesla consistently has one of the highest sales volumes in the entire market for new energy vehicles, with significant profits. There is no other way to put it than to say that the sales volume is not ideal for themselves and that the related sales plan may need to be changed in the future.