As electric vehicle sales growth comes back down to earth and the Chinese auto market becomes increasingly crowded, Elon Musk’s Tesla has reportedly told workers to relax.
Bloomberg, citing unnamed sources familiar with the matter, reports that Tesla told employees at its Shanghai factory to decrease production of the Model Y and Model 3 EVs by working five days a week instead of six and a half days. Gigafactory Shanghai’s production lines will continue to run on two 11.5-hour shifts, but overall output has been trimmed as of earlier this month, Bloomberg reports.
Some of Giga Shanghai’s production lines, including battery workshops, have been put under longer suspensions, and suppliers have been told to prepare for extended production limits through April.
The news sent Tesla’s stock down more than 3% in premarket trading Friday, and shares were trading down about 2% by mid-morning. Tesla is the worst-performing stock in the S&P 500 this year and has been kicked out of the top 10 U.S. companies by market capitalization, trailing behind Visa and JPMorgan Chase.
The stock has dropped 30%. Only Boeing — thrown by a steadily worsening scandal over its 737 Max jets — comes close to Tesla’s losses, with its stock down 25%.
Demand for EVs has slowed worldwide, pushing automakers to slow investment and slash prices. Although growth is still present, it’s not up to par with the rapid developments in previous years.
Tesla shipped 60,365 units made in China last month, a 19% decrease compared to the previous year, according to data from the Chinese Passenger Car Association released Monday (CPCA). Those results showed a drastic decline from sales in prior months and the company’s lowest monthly report since December 2022.
The Austin, Texas-based company EV maker has continued to offer incentives to local buyers, even as it plans to raise prices on China-made Model Y SUVs beginning in April; Tesla has also said it will spike prices in the U.S. and China next month. Despite its efforts, just over half of Tesla’s shipments in January and February went to local buyers in China, according to the CPCA.
Tesla’s competition heats up
Tesla faces increased competition as rival companies launch new — and ultra-cheap — models.
The updated version of BYD’s e2 EV hatchback will be priced at 89,800 yuan ($12,485), 12.6% less than the previous price of 102,800 yuan ($14,303). The Shenzhen-based automaker has released several other models, including its $233,000 Yangwang U9 “supercar.”
Xiaomi, a Chinese smartphone maker, has launched its first EV, which it claims will be faster than Tesla and Porsche’s respective electric offerings. The company is expected to reveal a sticker price next week.