Tesla extends the shutdown at its Shanghai factory in a rare Christmas suspension

Singapore –

Tesla company

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It suspended auto production at its Shanghai plant on Saturday, extending a planned production halt by eight days at its largest worldwide automaker, according to people familiar with the matter.

People said Tesla told some of its employees in Shanghai on Saturday that it would stop producing cars that day, a day earlier than originally scheduled. They said earlier that the company had informed employees that production would resume on January 2.

One person said that while it is not unusual for automakers to pause work on some production lines during the Lunar New Year and summer holidays, Tesla has not traditionally stopped all car production during the Christmas holidays.

People said that Tesla had built enough inventory and that stopping production wouldn’t hurt its ability to fill orders. During the summer, Tesla Shanghai capacity boosted It plants more than 750,000 vehicles annually. However, demand for its cars has been weaker than expected over the past two months, they said China’s auto market has turned into a slump.

Tesla buyers in China can currently receive their new cars in four weeks, compared to September, when The wait was up to five times as longAccording to the company’s website.

Tesla did not respond to a request for comment. On Sunday, the company told the Global Times, a news outlet run by the Chinese Communist Party, that it had planned annual maintenance for auto manufacturing lines in Shanghai this week, and that workers would take a break during this period. Tesla said it will not close the workshop that makes the charging pedestals during this period, according to the Global Times report. Reuters reported earlier about the comment.

COVID-19 infection swept China in recent weeks after Beijing It has relaxed its Covid-free policiesand excluding workers at automakers and their suppliers, as well as dealership employees. Fewer potential customers were visiting stores as fears of infection remained high.

Tesla factory in Shanghai It was forced to close for weeks earlier this year due to disruptions related to Covid-19, prompting Wall Street to downgrade its forecast for the automaker’s growth this year.

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Demand in the world’s largest auto market has been weak since October, as Beijing’s strict Covid-19 control measures forced companies to close and confine potential buyers at home. Car sales in November decreased by 9.2%. than the previous year, according to official data.

The China Passenger Vehicle Association on Friday forecast nationwide auto sales in December would grow 4.5% from a year earlier, a relatively modest growth rate given the year-end expiration of subsidies aimed at making electric vehicles more attractive. Sales of electric vehicles, a growth engine for China’s auto market, have slowed significantly since June.

In the third quarter of the year, Tesla said it produced 22,000 more cars than it produced globally, raising fears of stagnant demand, especially in China. The company has lost nearly 70% of its market value since its stock hit a record high in November 2021, in part due to concerns about weak demand for electric vehicles.

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CEO of Tesla

Elon Musk

He said Thursday in a chat on Twitter Spaces that he forecasts the global economy to fall into a “serious recession” in 2023, which lowers demand for big-ticket items. He said Tesla’s gross margin was higher than its peers, giving it room to maintain sales growth by lowering prices. car maker Double the discounts Offered on the two most popular models delivered in the US this month.

In China, Tesla cut prices in the fall with the support of Warren Buffett

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accommodate Provided by Tesla. The American electric automaker is offering various incentives to move cars out of the lot before the new year.

Tesla’s Shanghai plant accounts for more than half of the company’s global car deliveries. During the five months from July to November, Tesla sold more than 332,000 Model 3s and Model Ys from the Shanghai plant, 44% of which were exported to markets outside China, according to data from the Auto Union.

Write to Raffaele Huang at [email protected]

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