Tesla has reportedly decided to reduce the number of battery production workers at its facility in Shanghai, China. According to some reports, the layoff decision stemmed from intense competition in China, leading to car manufacturers significantly lowering the prices of their vehicles.
Laying Off Workers in China
Citing Bloomberg sources, Reuters reported that the electric car maker has laid off some battery production workers. However, it was unclear how many people were let go. The specific reasons behind the layoffs were also not mentioned in the report.
According to Bloomberg sources, Tesla started informing some employees on the battery cell assembly lines at the first phase of its Shanghai plant about the layoffs earlier this week.
While Tesla's representatives have yet to comment or announce any information about the layoff, more than 50% of the phase one battery assembly line workforce were reportedly at risk.
Tesla's Gigafactory Shanghai, its largest and most productive plant producing Model 3 and Model Y cars, has a production rate of 1 million vehicles per year. The company has around 20,000 workers at its Shanghai plant.
Deep Analysis news portal said less than 1,000 workers were employed on the factory's two battery production lines, which can produce 3,400 batteries, more than the amount needed for vehicle production. According to the Bloomberg report, the ample battery assembly capacity of the plant is another major reason for the layoffs.
Although Tesla utilizes batteries produced by LG Energy Solution Ltd. and Contemporary Amperex Technology Co. Ltd. for their vehicles, the cells must still be built into battery modules and packs before being installed in the cars. Much of that part of that process is being done at the battery workshop of the company.
Replacing Human Staff With Automation Equipment
According to a Bloomberg source, Tesla is planning to use some automation equipment that could help decrease human dependency and human labor on the battery production line. It is currently in the design and construction phase. Thus, the automaker already informed its employees as early as now.
According to the report, the layoffs are also partially connected to the US government's prohibition of subsidies for batteries imported from China. This policy necessitates local car companies to utilize batteries manufactured in the US.
Business Times reported that some workers had been offered a choice to transfer to another workshop, such as painting, stamping, or general assembly. It was also reported that vehicle manufacturing-related jobs have not been affected by the layoffs yet, as sales of Tesla vehicles are still strong.
Tesla sold a total of 93,680 vehicles manufactured in China last month, which include exports. This figure is the second-highest sales on record, following the 100,291 vehicles sold in November 2022.
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