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    Home / News / Auto News / Tesla cuts Model Y production in China by 20%
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    Tesla cuts Model Y production in China by 20%
    The decision to reduce production could be attributed to declining sales

    Tesla cuts Model Y production in China by 20%

    By Akash Pandey
    May 25, 2024
    10:13 am
    What's the story

    Tesla, the leading global electric vehicle manufacturer, has reportedly decided to cut production of its top-selling Model Y electric vehicle (EV) in China by about 20%. While Tesla has not officially confirmed this decision, an anonymous source cited by Reuters claims that production was indeed cut between March and June. The Model Y has been instrumental in driving Tesla's sales in China, contributing over 75% of the company's total sales until April.

    Market impact

    Model Y dominates company sales in China

    The Model Y, along with other Tesla EVs, is produced at the company's Gigafactory in Shanghai. China stands as the second largest market for Tesla outside of its home base in the US. Until April this year, the Model Y accounted for a significant 77% of Tesla's total sales in China. Besides the Model Y, Tesla also sells the Model 3 electric car in China.

    Information

    Facing stiff competition in Chinese market

    Tesla has recently been drawn into a price war due to fierce competition from local Chinese rivals. Data from the China Association of Automobile Manufacturers (CAAM) shows a drop in Model Y production to 49,498 units in March and 36,610 units in April.

    Sales decline

    Total sales and production numbers

    As of last month, Tesla had produced just over 287,000 electric cars in China, marking a decrease of around 5% compared to the same period last year. However, production of the Model 3 EV saw an increase by 10% during this period. This comes amid a recent drop in Tesla's sales within China, with the company experiencing a nearly 7% decrease in market share within the electric and plug-in hybrid segment during the first four months of this year.

    Strategic moves

    Response to market challenges

    In response to the downturn, Tesla has reduced the price of its Model Y to its lowest point since its debut in 2021 and offered a zero-interest financing scheme on its Model 3 model. Despite these efforts, Chinese EV giants like BYD continue to dominate the EV segment. For 2024, Tesla has set a goal to sell more than 600,000 electric vehicles within China. However, if reports about reduced production are accurate, it may need to revise this annual outlook.

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