Tesla‘s most productive electric vehicle plant, Giga Shanghai, was previously reported to suspend production before the year’s end. Now, Reuters reports that the American automaker has pushed through the rumored suspension on December 24.
It must be noted that the news is rooted in unofficial sources from “an internal notice and two people with knowledge of the matter.” That said, there is no official statement as to why Tesla suddenly stopped production.
Interestingly, the report highlights that this move is not a standard procedure to suspend production before the year’s end, given that it did not happen last year.
What might cause Tesla to suspend production?
The report cited two possible reasons that might have affected Tesla’s operation in its Giga Shanghai plant in China. The first is due to COVID-19, while the other is about issues in demand.
“The suspension comes among a rising wave of infections after China eased its zero-COVID policy earlier this month, an abrupt move welcomed by businesses and the public but heavily disrupting business operations in the short term.”
Reuters
According to one of the sources, this wave of COVID-19 infections has also been affecting Tesla employees and suppliers. It has made operations difficult over the past week.
For the second reason, the increased production capacity of the Giga Shanghai plant might over exceed the low demand for Tesla vehicles in China. Reports claim that Tesla’s inventory levels rose this year. In fact, Tesla has decreased costs, provided incentives connected to insurance, and introduced additional discounts to sell as much as possible.
Furthermore, the 11,088 CNY (nearly $1,600) BEV subsidy expires at the end of the year. It implies that this year’s start may be slower than last year’s.
However, there is nothing extremely serious to be concerned about, as the market environment is quite volatile. Furthermore, 2022 was challenging for several reasons, including COVID-19, chip supply constraints, economic problems, etc.
