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Tesla Raises Giga Shanghai Output Amid Increased Demand Fueled by Recent Price Cuts

Tesla aggressively slashed prices across its lineup in January, a move that started with the Chinese market. The price cuts energized Tesla sales, so the company is now stepping up production at Giga Shanghai to meet increased demand.
Tesla raises Giga Shanghai output amid increased demand 6 photos
Photo: Tesla
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Tesla faced sluggish sales at the end of 2022, with demand at the lowest level in years. The EV maker inflated inventories for a while, but in the end, it was forced to idle factories and adjust production to the new market reality. This started in China, where Tesla faced harsh competition from local brands, with a production cut at Giga Shanghai in December. The reason Tesla offered for the slowing output was planned maintenance. Tesla later announced more production cuts to follow the Chinese New Year holidays.

Tesla denied having a demand problem and stated that the production cuts resulted from external factors. Nevertheless, the EV maker started slashing prices on its most popular models in January. It also offered lowered interest rates for car loans through its partners. The price cuts rattled its customers, who mobbed Tesla showrooms, expressing their anger and demanding compensation. Nevertheless, the price cuts have been very efficient in driving people into showrooms, and I mean not only to protest.

Tesla’s moves have made life difficult for other carmakers in China, which saw their customers canceling orders at alarming rates. At the same time, Tesla enjoyed increased demand for its cars, a clear sign that the price cuts worked. Another good sign is that Tesla is considering raising production at Giga Shanghai at the boom levels of September 2022, when the EV maker produced 82,088 Model 3 and Model Y cars.

According to an internal memo that Reuters consulted, Tesla plans to produce an average of 20,000 cars per week in February and March at Giga Shanghai. This level maxes out the production capacity of the Chinese gigafactory, which is around one million vehicles a year or more than 19,000 units per week.

Elon Musk revealed during the Q4 2022 earnings call last week that the price cuts helped increase the number of orders to the highest level in Tesla’s history. People ordered twice the number of cars Tesla produced in January, which is impressive considering the stalemate from a month before.

“Thus far in January, we’ve seen the strongest orders year-to-date than ever in our history,”
Musk said during the call. “We currently are seeing orders at almost twice the rate of production. It’s hard to say whether that will continue twice the rate of production, but the orders are high.”

Musk said 2023 production could reach 2 million vehicles if there isn’t external disruption, but went cautious with a 1.8-million units guidance. As reported by Reuters, Tesla sales in China surged in January by 36% compared to January 2022, to almost 30,000 vehicles. The overall car sales dropped 45% in the same period, data from China Merchants Bank International showed.
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About the author: Cristian Agatie
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After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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