SHANGHAI, Dec. 5 (Reuters) – Tesla (TSLA.O) Two people familiar with the electric car maker’s production plan said on Monday it plans to cut December production of the Model Y at its Shanghai plant by more than 20% from the previous month.
The planned production cut comes after Tesla reported record sales in China for the month of November.
The production cut was first reported by Bloomberg, which said the move was a reflection of sluggish demand.
Reuters was unable to determine the reason for the planned reduction in production at the Shanghai factory, Tesla’s largest production center.
A Tesla representative did not initially respond to a Reuters request for comment.
Late Monday, a Tesla representative responded, “Fake news,” without elaborating. The spokesman did not respond to questions from Reuters about whether Tesla denied any production cuts or whether the move was related to weak demand.
Tesla shares fell 2.1% in pre-market trading in New York, snapping from previous lows after the company’s statement.
Inventory levels at Tesla’s Shanghai factory rose sharply after it completed an upgrade of manufacturing facilities in the summer, with electric vehicle inventories increasing at the fastest pace on record in October.
The U.S. automaker cut prices for its Model 3 and Model Y cars by up to 9% in China and offered insurance incentives, helping November sales of its China-made cars increase 40% from October and up 89.7% from a year earlier. .
Tesla delivered 100,291 China-made electric vehicles in November, the highest monthly sales since opening its Shanghai factory in late 2020, Xinhua reported Monday, citing Tesla.
The company’s high inventory levels in Shanghai come as China’s auto market grapples with slowing demand and disruptions to local supply chains.
Uncertainty about when China will take significant steps to ease its “dynamic, COVID-free” strategy has clouded expectations for the world’s largest auto market, although some Chinese cities have taken steps to ease some restrictions in the wake of protests in recent weeks.
Globally, Tesla planned to push production of the Model Y and Model 3 EVs sharply in the fourth quarter with newer production plants in Austin, Texas and Berlin, Reuters reported in September.
The automaker plans to begin production of a facelifted version of the Model 3 in the third quarter of 2023 in Shanghai, as it aims to lower production costs and boost the five-year-old electric sedan’s appeal.
(Reporting by Zhang Yan and Brenda Goh) Editing by Kim Coghill, Kenneth Maxwell, Simon Cameron Moore and Susan Fenton
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