Recently, according to Reuters, a source said that Tesla's Shanghai super factory plans to reduce Model Y production by at least 20% between March and June, aiming to address Tesla's weakened demand in the Chinese market. It is currently unclear whether Tesla's production reduction plan will continue into the second half of this year, or whether it will choose to increase production of the Model 3 model. Furthermore, it is still unclear whether Tesla's factories in the United States and Germany will adopt similar production reduction measures.
Reuters
In response to the above situation, a reporter from the Daily Economic News sought confirmation from Tesla China, but the other party refused to comment.
Jiang Han, a senior researcher at Pangu Think Tank, believes that "the decrease in market demand is one of the main reasons for Tesla's production reduction, and intensified market competition is also an important factor leading to its production reduction." Some also believe that global supply chain bottlenecks have had a certain impact on Tesla's production capacity, especially raw material shortages and logistics problems.
The reporter recently learned from Tesla's offline sales points in Beijing that "it will take approximately 3 weeks from purchasing the vehicle to delivery.". The reporter found that compared to mid May, the delivery cycle of Tesla's current vehicles in Beijing has been extended by one week.
Tesla's market share in China is declining
According to data from the China Association of Automobile Manufacturers, Tesla Model Y's production in China in March this year was 49498 units, while in April this number decreased to 36610 units, with both numbers decreasing by 17.7% and 33% respectively compared to the same period last year. In addition, in the first four months of this year, Tesla produced a total of 287359 Model Y and Model 3 cars in China, a decrease of 5% compared to the same period in 2023.
While production has declined, Tesla's market share in China has also further declined. According to data from the China Passenger Car Market Information Joint Conference, Tesla's share in the Chinese new energy vehicle market has decreased from 7.8% for the entire year of 2023 to 6.8% in the first four months of this year.
"China's electric vehicle market has grown rapidly in recent years, attracting more and more domestic and foreign manufacturers. Tesla is facing fierce competition, and its scattered market share has led to a sharp decline in sales." Jiang Han said.
In order to stimulate sales, Tesla lowered the selling price of the Model Y in the Chinese market to its lowest level since its launch in 2021 in April and provided a zero interest financing plan for Model 3 buyers. However, Tesla, which chose to reduce prices for promotion, did not see a significant improvement in sales in China.
Public data shows that Tesla sold 62167 cars in China in April, a year-on-year decrease of 18%. In that month, the sales of new energy vehicles in China, including pure electric vehicles and plug-in hybrid vehicles, were about 800000 units, a year-on-year increase of 33%. Tesla's competitor BYD sold over 312000 vehicles in April, a year-on-year increase of 48.97% and a month on month increase of 3.5%.
Regarding this, an automotive analyst from Western Securities believes: "Taking the domestic market as an example, some manufacturers basically update their models once a year, while Tesla may only update once every two to three years. Although the new Model 3 high-performance version was released in April, it is difficult to impress consumers in terms of positioning and price."
A consumer planning to purchase new energy vehicles also told reporters, "The Tesla brand is very good, but currently the performance and service of domestic cars in the same series on the market are not poor. In addition, car companies are competing to lower prices and are preparing to see which brand of electric vehicle to buy."
The latest impact report does not mention the 2030 sales target
It is worth noting that on May 24th, Tesla released its latest impact report, which did not mention the goal of selling 20 million cars annually by 2030. Some argue that this may indicate that Tesla is gradually shifting its focus from cars to robots AI、 Business such as autonomous driving and energy storage.
Tesla recently announced that it will launch the Robotaxi autonomous taxi service on August 8, 2024. Meanwhile, Tesla's FSD (fully autonomous driving) technology has been upgraded to the V12.3 stage. In terms of energy storage business, Tesla is also accelerating its layout. The construction of Tesla's Shanghai energy storage super factory officially started on May 25th, and it is expected to mass produce the commercial energy storage system Megapack in the first quarter of next year.
Regarding this, Jiang Han said, "Removing this target may mean that Tesla is reassessing its long-term business strategy, which should be based on a comprehensive consideration of current market conditions, capacity constraints, supply chain issues, and intensified competition."
According to Reuters, an insider revealed that Tesla plans to sell 600000-700000 vehicles in China and 2 million vehicles globally by 2024, unchanged from its target at the beginning of the year.
However, looking at Tesla's performance since 2024, from lower than expected delivery volumes and financial reports, to a decline in stock and market value, and then to global layoffs, various negative information continues. This may mean that Tesla has slowed down and entered a new "downward cycle".
It is worth mentioning that Tesla's current flagship models are also facing a fierce competitive environment. Previously, there was a competition between models such as the Xiaopeng G6, Zhiji LS6, BYD Song L, and Ledo L60, while later there were new models such as Xiaomi's pure electric SUV and Avita 07 that were about to enter the market. The competition pressure was high.
Jiang Han believes that the key to solving Tesla's current predicament is to deeply understand the needs and preferences of Chinese consumers, and develop models and configurations that are suitable for the market; Secondly, it is necessary to flexibly adjust pricing strategies to attract price sensitive consumers, while strengthening after-sales service and improving customer experience.
An industry insider close to Tesla told reporters, "Tesla may have some price reductions in the supply chain to maintain its stable gross profit margin."