In an environment of weak electric vehicle sales and highly competitive market, even global pure electric vehicle sales champion Tesla cannot withstand the pressure of declining sales. After a year, Tesla once again announced plans to reduce production capacity.
According to market reports, Tesla China earlier this month adjusted the weekly working hours of its Shanghai factory employees from the original six and a half days to five days, thereby reducing the production of Model Y and Model 3. The production reduction action is likely to continue until April. The employees have not yet received clear instructions on when production will resume normal.
Interface News has sought confirmation from Tesla China regarding this news, but as of press release, there has been no response.
Although Tesla is prepared for a significant slowdown in growth this year, reducing production is not a positive signal. The direct sales model adopted by Tesla is to arrange production plans based on order volume, without dealers playing a role in regulating the reservoir. The reduction in production capacity means that Tesla's terminal order volume is not as expected.
According to data from the China Association of Automobile Manufacturers, Tesla's sales in China in February were 60000 vehicles, a decrease of about 19% from last year. The total delivery volume of Tesla's Chinese made cars in the first two months of this year was 131800 units, a decrease of 6% compared to 2023.
A week ago, Tesla China announced a 5000 yuan increase in Tesla Model Y prices and a reduction in terminal promotion policies starting from April 1st. Zhu Kai, General Manager of Jielan Road, pointed out to Interface News that this is a disguised push for orders, aimed at boosting sales at the end of the quarter. At present, the delivery time for Tesla Model 3 and Model Y is between 2 to 6 weeks.
"Tesla has quite limited cards to play, and the Chinese market is already the cheapest place for Tesla models globally," said Zhu Kai. Since the beginning of this year, Tesla China has launched three rounds of promotions, almost as many as last year, but these measures are becoming increasingly unnoticed.
Chinese domestic competitors pose a great threat to Tesla. Most Chinese automotive brands focusing on the price range of 200000 to 300000 yuan are benchmarking against Tesla Model 3 and Model Y, with higher product configurations. The 800V architecture platform, 8295 cockpit chip, and advanced urban intelligent driving have become standard configurations for consumers in the segmented market with a price of over 250000 yuan.
At a time when the penetration rate of new energy exceeds 35% and new domestic car manufacturing forces are expanding into lower tier markets such as second and third tier, Tesla has shown a slight delay in store layout and market development.
According to data provided by Jielan Road, as of the end of 2023, Tesla had 395 stores with sales functions, far less than "Weixiaoli"; Last year, Tesla's new stores were still mostly concentrated in new first tier cities, while companies such as Ideal Automobile have already focused on expanding into third - and fourth tier areas.
Tesla also faces more threats in other overseas markets. Legacy car manufacturers such as Toyota, Volkswagen, Ford, and General Motors are launching a variety of hybrid models to challenge Tesla's position in the new energy vehicle market. This type of vehicle is both energy-saving and has long endurance, and its popularity has surpassed that of pure electric vehicles.
Tesla's Shanghai super factory simultaneously undertakes export tasks, covering countries such as Europe, Japan, and South Korea. UBS has lowered its growth forecast for European electric vehicle sales in 2024 by 10 percentage points to 15%. This is also detrimental to Tesla's global sales growth.
At the 2023 financial performance meeting, Tesla warned that the growth rate this year will significantly decrease. The growth rate of production, delivery, and shipment in 2024 may be significantly lower than in 2023. Tesla has not announced its delivery target for this year, and has long set its annual average growth rate at 50%.
For a considerable period of time, Tesla was linked to production capacity bottlenecks, and CEO Elon Musk had to settle in the factory to solve the "production capacity hell" problem. It is difficult to imagine that this leader in new energy vehicles may face a crisis of overcapacity. At present, Tesla's Shanghai super factory has increased its annual production capacity to 950000 vehicles.
In the past two years, Tesla has briefly suspended production for a few days due to production line adjustments or non market factors such as the pandemic. In December 2022, Tesla's Shanghai super factory announced for the first time that it would proactively reduce production by 20%, but this was denied by relevant personnel.
Following the start of 2023, Tesla China announced a price reduction across its entire lineup, with a maximum reduction of 48000 yuan. The starting prices of both the Model 3 and Model Y reached historic lows. This price reduction marks the beginning of the most widespread and deeply influential price war in the Chinese automotive industry.
Zhu Kai told Interface News that due to the brand effect, Tesla still has certain advantages and will mainly target fuel car consumers. This pure electric vehicle manufacturer is still the first choice for first-line luxury brand users when choosing new energy vehicles, but the dominant good era has almost disappeared.