Tesla Halts EV Production at Shanghai Facility Amid Declining Demand

An internal memo and two sources familiar with the situation confirmed on Saturday that Tesla has halted production at its Shanghai facility, a week earlier than planned. The American carmaker informed all employees at its busiest production facility that the morning shift had been cancelled and that they may begin their break, according to the persons and the message seen by Reuters. The business omitted a justification.

The suspension follows China’s earlier this month easing of its zero-Covid policy, which was abruptly hailed by companies and the public but severely disrupted corporate operations in the near term. Since then, there has been an increasing wave of infections:

The suspension comes among a rising wave of infections after China eased its zero-COVID policy earlier this month…

One of the people said workers at Tesla and its suppliers have also been falling sick as part of this wave, posing challenges to operations in the past week.” 

-Reuters

The second, and in our opinion the most significant, is that the increased production capacity of the facility could not be able to meet the demand for Tesla automobiles in China. According to Reuters, the Model Y, Tesla’s best-selling model, would no longer be assembled at the Shanghai facility at the end of the month as part of a projected 30% reduction in output. Elon Musk electric car company’s primary production facility, located in Shanghai, continued to operate normally throughout the last week of December of the previous year.

The plant’s closure for a year-end holiday has not been a standard norm. However, there is nothing really serious to be concerned about; instead, there are constant alterations. The market environment is quite volatile, and 2022 was very difficult for a number of reasons, including COVID-19 problems with the supply of chips, and economic problems, to mention a few. With growing EV demand internationally, it is certain that the closure isn’t permanent.

Source: Reuters 

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Muhammad Zuhair


Passionate about technology and gaming content, Zuhair focuses on analysing information and then presenting it to the audience.
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