Tesla (TSLA) stock fell after it was reported that it was reducing electric vehicle production at Giga Shanghai

Tesla (TSLA) stock fell this morning on a report that automakers are reducing production of their electric vehicles at the Gigafactory Shanghai due to falling demand.

Bloomberg He says Tesla removed a day and a half from work at Gigafactory Shanghai:

The US automaker earlier this month instructed employees at its Shanghai facility to reduce production of both the Model Y and Model 3 – the two cars Tesla makes in China – by working five days a week instead of the usual 6 and a half days, it said. the people. he said, requesting anonymity because they were not authorized to speak publicly.

The change reportedly happened earlier this month and Tesla has not informed employees when it plans to return to full capacity.

This comes after indications that Tesla has clearly had more difficulty than usual selling cars in China recently.

Earlier this week, Electric It mentioned how Tesla is offering deeper-than-usual discounts and incentives for customers to take delivery by the end of the month.

The Bloomberg report also claims that the decline in production capacity is extending to other parts of the plant beyond Model 3 and Model Y production:

Some production lines at Tesla's Shanghai factory, including battery shops, are subject to a longer suspension, one of the people said. Tesla has asked employees and some suppliers to prepare for production limits extending into April. In early April, China will celebrate Tomb Sweeping Day, a holiday that is usually a quiet time of consumption.

On top of difficulties selling its existing inventory, Tesla's sales of Chinese-made vehicles have declined this year as well.

According to the China Passenger Car Association Expo, Tesla delivered 131,812 vehicles in the first two months of 2024, a decline of 6% year on year. Moreover, only 53% of these Chinese-made vehicles were sold in China. Tesla exported the rest.

Competition in China is very high, with Chinese electric car manufacturers offering cheaper electric cars and increasing their quality.