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Tesla stock drops on report it slashed China factory output

Published 03/22/2024, 06:25 AM
Updated 03/22/2024, 06:28 AM
© Reuters.  Tesla stock drops on report it slashed China factory output

Tesla (NASDAQ:TSLA) has reportedly scaled back its electric vehicle (EV) production in China as it faces slower growth in the sales of new-energy vehicles and increased competition in the world's largest car market.

The EV maker slipped more than 3% in premarket trading Friday.

According to Bloomberg News, the company has adjusted the work schedule at its Shanghai plant from 6 and half days to five days per week for employees, affecting the production of its Model Y SUV and Model 3 sedan.

This change was allegedly implemented earlier this month, and it's unclear when production levels will return to normal.

Despite a 17% increase in China's passenger vehicle sales and a 37.5% rise in new-energy vehicle sales year-on-year in the first two months of 2024, Tesla saw a decline in its shipments.

Competing against local manufacturers like BYD Co. and others offering cheaper, tech-savvy options, the automaker relies on two vehicles that were launched before 2020, Model 3 and Model Y. The company has made minor updates to these models.

Meanwhile, it faces a broader slowdown in electric car demand not only in China but also in the US and Europe.

Further, Tesla's Shanghai factory, including battery production lines, may see longer halts in production, with staff and suppliers being warned of extended production restrictions through April, the report says.

In the first two months of 2024, Tesla delivered 131,812 vehicles, marking a 6% decrease from the previous year, with only 53% of these vehicles sold in the local market despite recent price cuts the carmaker has been implementing since the start of the year.

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