Tesla plans to begin cutting down on production shifts at its Shanghai facility as early as Monday, Dec. 12, according to individuals familiar with the matter.
This further indicates that the demand for the company's electric vehicles (EVs) in China is falling below expectations, as reported by Bloomberg.
Latest Move
Based on Bloomberg's anonymous sources, the plant will run two 9 1/2-hour shifts each day, down from the current two 11 1/2-hour shifts.
The adjustment will begin on Monday, but some last-minute modifications may be made, the insiders said. They claimed that the manufacturing staff's monthly compensation would decrease due to the shortened working hours.
One person said that shorter shifts at the Shanghai facility as part of the production decrease would not necessarily affect monthly deliveries since the firm still has inventory.
Tesla's website says Model 3 or Model Y orders in China should be delivered this month. That lead time is lower than earlier this year when it might take up to 22 weeks.
Demand Issue
Tesla "increasingly appears to have a demand issue," analyst Toni Sacconaghi Jr. warned this week.
At 8:28 AM EST, Tesla shares had down 1.3% after initially plunging as much as 2.3% in early New York trade.
In Bloomberg's separate report earlier this week, Tesla will slash output by around 20% this month at the Shanghai facility, impacting both the Model Y and the Model 3 manufacturing lines.
However, a Tesla spokeswoman flatly denied the rumor that the automaker will reduce production, calling it "untrue."
Additional sources have reported that the new recruit onboarding process has been put on hold.
Some manufacturing personnel who were due to start in November, including in Tesla's battery workshops and on car assembly lines, were advised by the firm that start dates would be postponed.
As there is no immediate need for new staff at the moment, one person stated they were advised to be ready to start after the Chinese New Year vacation, which is in late January.
Tougher Competition
After a promising start in China, Elon Musk's EV pioneer faces stronger competition in the world's largest auto market.
Recent markdowns and incentive offers indicate demand is not keeping up with supply after a manufacturing renovation doubled production to 1 million cars a year.
Tesla provided 6,000 yuan ($860) discounts to consumers who purchase and take possession of new vehicles this month.
In November, Tech Times reported that China's marketing push had been revised.
The automaker provided chosen poll respondents with a Model 3 for a week in return for test-drive ideas.
Also, car owners in China who suggest a Tesla to friends and family get minor rewards like headphones or strollers and a chance to win a trip for two to the Shanghai factory or a Tesla for a year.
Bloomberg said that Tesla's rise in the world's largest EV market is critical to Musk's ambition of 50% yearly growth for years to come.
