Tesla Upgraded Giga Shanghai to Produce More Cars, Will Not Go Full Throttle – Why?

Tesla never ceases to take measures that are difficult to explain in a rational way. Not long ago, it based all its new products on a new cell – the 4680 – that promised to give it a unique competitive edge. Years later, the first teardowns revealed it is just an ordinary NMC cell in a bigger package. The latest example of these bizarre moves is that Giga Shanghai, recently upgraded, will not work at full steam.
Tesla Giga Shanghai 6 photos
Photo: Tesla
Tesla ShanghaiTesla ShanghaiTesla ShanghaiTesla ShanghaiTesla dismisses Shenyang factory reports as "fake news"
According to Reuters, Tesla will run Giga Shanghai at 93% of its capacity. The news service informs that the production capacity is now 22,000 units per week after a $170-million upgrade. The factory would make 14,000 units of the Model Y and 8,000 Model 3s. With the 93% restriction, those numbers would drop to 20,500 EVs weekly: 13,000 Model Ys and 7,500 Model 3s.

However, Bloomberg presented different numbers on June 23: the upgrade would have improved Tesla’s numbers from 11,000 cars per week to 14,000 EVs. Considering the factory changes would improve Tesla’s numbers by 30% and that Giga Shanghai made 484,130 EVs in 2021 (around 9,310 per week), Bloomberg’s numbers seem more accurate.

With that in mind, Giga Shanghai will produce 13,000 EVs instead of 14,000 weekly. That would make sense if Tesla preserved the same demand it had before the upgrades, which definitely does not seem to be the case.

According to Reuters, Tesla cut delivery times four times since August, reducing the wait time from a minimum of 12 weeks to only one. In a market that saw sales of all cars increase by 60% and sales of new energy vehicles (NEVs) double, a 30% production improvement would only ease the proportional increase in wait times. Tesla is even offering a rebate in insurance as an incentive to sell more. Wait times were also reduced in Australia and other markets fed by Giga Shanghai.

If demand is steady, why invest $170 million to increase production? It only makes sense if Tesla is planning to sell its vehicles in more markets. However, Giga Grünheide will start supplying European countries with its cars, reducing the demand for vehicles made in China. Again, why increase the production there? With decisions like this, it is no surprise that Elon Musk qualifies its new factories as money furnaces. Even current ones such as Fremont and Giga Shanghai may start burning money in such a scenario.
If you liked the article, please follow us:  Google News icon Google News Youtube Instagram X (Twitter)
About the author: Gustavo Henrique Ruffo
Gustavo Henrique Ruffo profile photo

Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
Full profile


Would you like AUTOEVOLUTION to send you notifications?

You will only receive our top stories