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published in Blogs
Dec 27, 2022
Tesla (TSLA, $123.15) temporarily suspends production in Shanghai

Tesla (TSLA, $123.15) temporarily suspends production in Shanghai

Tesla temporarily halted production in its Shanghai factory on December 24, one day before the planned date to suspend vehicle assembly at this site. According to a Reuters report, the electric carmaker planned to pause production in Shanghai for a week, between December 25 and January 1.

While the company has not provided any official reasons for this temporary halt, it is likely that the resurgence of the COVID-19 pandemic in China, following the nation’s relaxation of restrictions, is a factor. Citing anonymous sources, Reuters reported that Tesla workers and suppliers have been falling sick as part of the new COVID-19 wave.

Weakening demand in China could be an additional reason. Tesla has repeatedly reduced the prices of the Model 3 and Model Y in China in recent weeks, introduced promotional offers and also decreased vehicle delivery times. Some reports had also been suggesting that Tesla will lower output in the Shanghai factory, which would be the first voluntary reduction of production levels since the factory was opened in 2018 (although COVID-19 restrictions and scheduled maintenance compelled the company to lower production earlier this year).

Shanghai factory accounted for around 51.7%, or 484,130, of the 936,222 vehicles delivered by Tesla in 2021. The capacity of the factory is over 750,000 vehicles per year.

Tesla shares fell almost -37% in December alone, representing around $226 billion decrease in market capitalization.

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