AutoBeta(AutoBeta.net)12/05 Report--

According to the data, the Tesla Shanghai super factory delivered 100291 new cars in November, setting a new monthly delivery record; the cumulative delivery volume from January to November in 2022 exceeded 650000, but there were media reports today that Tesla's Chinese market demand could not keep up with capacity supply. therefore, Tesla Shanghai factory will take the initiative to reduce production by 20%.

According to media reports, people familiar with the matter said Tesla plans to reduce capacity at his Tesla plant in shanghai by about 20 per cent, which will take effect as soon as this week. According to the report, this move is related to the fact that the demand in the Chinese market does not meet Tesla's expectations, and it is also a decision made by Tesla after assessing his recent performance in the domestic market. People familiar with the matter also revealed that if demand increases, Tesla has enough flexibility to increase production.

It should be noted that, unlike previous factory production cuts, this is the first time that Tesla has voluntarily reduced production at the Shanghai factory, that is to say, Tesla's plan to reduce production is not caused by the epidemic or supply chain chaos, but because demand is lower than expected.

A spokesman for Tesla China declined to comment on the news.

Since the completion of the transformation and upgrading of Tesla's Shanghai factory in early August, the factory's production capacity has increased to 1.1 million vehicles, an increase of about 127 per cent year-on-year. In the past three months, Tesla has launched heavyweight price cuts and promotions in the Chinese market one after another, due to a substantial increase in production capacity and a marked reduction in delivery time after the upgrading of Tesla's factory. According to the China Bank International report, the production capacity of Tesla's Shanghai factory in October 2022 is about 87700 vehicles, which is about 16000 vehicles higher than the delivery volume, and the gap between production and sales is relatively large; on the other hand, it is to sprint delivery volume to achieve the annual target.

In order to stimulate sales, Tesla has introduced insurance subsidy programs and price reduction adjustments in the Chinese market since September, the largest of which was Tesla's announcement on October 24th that it would lower the price adjustment of Model3 and ModelY on sale in Chinese mainland area, ranging from 14000 to 37000 yuan. After the news was released, it quickly went popular on Weibo, causing strong market concern. According to statistics, after price adjustment, the starting price of Model3 models is 265900 yuan; the starting price of Tesla ModelY models is 288900 yuan (all subsidized starting prices), of which Model3 drops by 1.4-18000 yuan and ModelY by 2.0-37000 yuan.

Since then, insurance subsidies have been introduced many times, most recently this month, on December 2, Tesla officially said that consumers who buy existing cars in December and pick up their cars on schedule will enjoy an insurance subsidy of 4000 yuan; in addition, consumers who place orders for Model 3 or Model Y models online and complete delivery will receive a bonus of 20, 000 points, which can be exchanged for free gifts such as 5000 km overcharging mileage and roof luggage rack. Prior to this, a report that "two waves of promotions don't work and Tesla will cut prices" spread widely on the Internet. According to the report, after two promotions, Tesla's order increase is still less than expected, so Tesla will launch new "price reduction measures" before the end of the year to promote sales. Regarding this news, Tesla related personage indicated to the media that this is untrue news.

"without more promotions, Tesla's new order from the Chinese market could return to 25000 in December," said industry insiders, adding that the increase in production at the Shanghai factory could not be fully absorbed by exports.

For Tesla, the Chinese market is the world's largest car export center and another major market besides the United States. It should be noted that with the accelerated transformation of domestic self-brand car companies to electrification, Tesla's market share in the Chinese market is also facing a shrinking crisis. From January to September in 2022, Tesla delivered 318200 vehicles in China, with a market share of 8.2%, according to the Federation of passengers. In order to rapidly increase orders, Tesla launched a variety of promotional activities in the Chinese market in October, but the data show that Tesla delivered 335400 vehicles in China in the first 10 months, and the market share has dropped to 7.6%. By contrast, BYD's share of the domestic new energy vehicle market is growing rapidly, with BYD's market share reaching 30.7% in the first 10 months of this year.

Earlier, Tesla CEO Elon Musk said that Tesla's global sales in 2022 will easily increase by more than 50% compared with 2021, mainly due to the start-up of new factories and the increase in the production of existing factories. However, in the first three quarters of Tesla's global delivery performance, Tesla has not been easy. Official data show that Tesla delivered a total of 908000 new cars worldwide in the first three quarters of 2022, according to the annual sales target of 1.5 million, which means that Tesla needs to deliver more than 500000 new cars in the fourth quarter, achieving at least 45.7% month-on-month growth. Tesla has little chance of achieving this goal, Tesla's chief financial officer ZacharyKirkhorn said on the previous conference call. Tesla is unlikely to achieve a 50% increase in annual delivery volume this year. Musk also said bluntly that Tesla may not be able to achieve his sales target this year due to continuing logistics challenges.

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