Tesla delivered a record 100,291 vehicles in November from its Shanghai Gigafactory on the back of expanded capacity and cut in prices.
However, the US carmaker is likely to face weak consumer demand in China in the coming months as buyers tighten their purse strings amid a slowing economy. A media report said that a production cut is planned this month because of fewer orders.
Deliveries from the Gigafactory 3, also known as Giga Shanghai, rose 40 per cent from 71,704 units in October, according to data by the China Passenger Car Association (CPCA). Tesla surpassed the previous record of 83,135 vehicles in September. The CPCA did not reveal the number of vehicles exported.
“Tesla’s capacity expansion has enabled it to flexibly arrange production based on orders it receives,” said Phate Zhang, founder of Shanghai-based EV news site CnEVpost. “It remains to be seen whether a consumption downgrade will affect its operations.”
Tesla completed an upgrade of the Shanghai Gigafactory in August, increasing capacity by 30 per cent to 1 million cars a year. Photo: Bloomberg
Coronavirus disruptions and lockdowns disrupted economic activity in China last month. The official manufacturing purchasing managers’ index fell to 48 in November, the lowest since April, after remaining below the 50-mark that separates growth from contraction for a second consecutive month. Analysts expect economic activity to weaken further this month and in the first quarter.
In August, Tesla completed an upgrade of Giga Shanghai, increasing capacity by 30 per cent to 1 million cars a year.
The expansion came after the plant was forced to suspend manufacturing due to a two-month citywide lockdown following a resurgence in Covid-19 cases. The carmaker lost 50,000 to 70,000 units in production between April and May, according to estimates by Wedbush analyst Dan Ives.
In the first 11 months of this year, Tesla delivered a total 655,069 vehicles, a 62.86 per cent increase year on year.
On October 24, Tesla offered price cuts on its Model 3 and Model Y vehicles assembled in Shanghai to bolster sales. The entry-level Model 3 was marked down by 5 per cent to 265,900 yuan (US$38,082), while the starting price of the Model Y sports-utility vehicle was cut by 8.8 per cent to 316,900 yuan.
But the discounts may not be enough to offset weaker consumer sentiment as an increasing number of middle-class consumers are balking at big-ticket items such as electric vehicles (EV).
Bloomberg reported on Tuesday that Tesla would slash output in December by 20 per cent because of fewer orders. Tesla denied the report and declined to provide further details.
Tesla is the runaway leader in China’s premium EV segment, competing against domestic smart EV start-ups such as Nio, Xpeng and Li Auto.
The Chinese rivals hit a blip over the past two months as their production was affected by a strained supply chain owing to pandemic restrictions in the world’s largest EV market.
In the second quarter, Tesla was overtaken by Chinese company BYD as the world’s largest EV builder.
BYD, backed by Warren Buffett’s Berkshire Hathaway, is expected to extend the lead over Tesla after it set a new monthly sales record for the ninth consecutive month in November.
The Shenzhen-based carmaker delivered 230,427 pure electric and plug-in hybrid cars in November, an increase of 5.8 per cent over October’s 217,816 units, it said in an exchange filing on Monday.
Keyword: Tesla’s Shanghai Gigafactory sets delivery record in November, but may face bumpy road ahead as buyers defer big-ticket purchases