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The Tesla Model Y in China
The Tesla Model Y is one of the best selling vehicles in China, whether gas powered or EV. Data supports that the Model Y is doing very well in China. So why would Tesla be stopping production of the Tesla Model Y? It doesn't seem to make sense that Tesla would do this unless they were doing upgrades or giving people time off for the year. This is something Tesla could report on, but they won't. There are two companies making EVs at scale in this world - BYD and Tesla. These companies need to succeed in order for EV adoption to grow throughout the world.
The media says that demand for Tesla's vehicles in China is a disaster and going down. The data shows that Tesla sold over 60,000 vehicles in China in November of 2022. That sounds like sales are going well in China for Tesla. Reuters reported that Tesla will stop Model Y production from December 25 to January 1, according to people with knowledge about the matter.
This isn't due to Christmas - that is not relevant to this decision. The reason for shutting it down will be part of a cut in plant production of the Model Y by 30%. Apparently two people told Reuters this. Last Christmas period in 2021, this didn't happen. Tesla hasn't responded to a request for comment and that is just not something Tesla does - it would be a full time job and take way too much time for Tesla.
So, what is the truth of this matter? Is Tesla simply taking a week to retool in order to much faster, better, and cheaper produce the Model Y? Is Tesla going to lower production of the Model Y?
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The Future of the Tesla Model Y
A week of suspended output of the Model Y is quite a lot of vehicles. That would be about 13,000 vehicles. Giga Shanghai suspending output of the Model Y would be quite a bit of loss. Tesla even responded to a Bloomberg statement that Tesla would suspend 20% of the Model Y's production and said that it was false. But that is all Tesla said - they didn't also say there is no production reduction.
Giga Shanghai can produce about 100,000 vehicles per month and last month in November, 2021, Tesla produced and delivered, including exports from Giga Shanghai, over 100,000 vehicles - it's highest output ever. That's about a 1.2 million run rate of vehicle production. 60% of those went to Chinese buyers. Tesla has offered limited discounts to buyers in China through the end of 2022. This is also being done in the U.S. I believe this is to get rid of existing inventory.
Companies selling premium EVs in China, like NIO, are selling about 10,000 per month. Tesla's rate is about 6 times that for sales in China. China's overall passenger vehicles sales fell in November, 2022, for the first time, and the market is expected to stay flat in 2023. Can all of this be believed? I think it is all false. It was said that demand collapsed in China. The data shows it is ever growing. Electric vehicle sales for November 2022 disproved the narrative being portrayed by mainstream media.
With so many false reports about production drops, demand issues, and other things, one need only look at the monthly data over time in China to come to the right conclusion. EV adoption world wide is soaring. Tesla sales are increasing month to month in China. Tesla has sold an enormous amount of vehicles. They've sold over 3 times as many cars in the 2nd half of 2022 than they did in the first half of 2022.
I think Tesla is just either doing retooling of their factory or having everyone focus on delivering existing inventory of Model Y/3 vehicles domestically to customers.
For more information on Tesla's China production, demand, sales, see this video from The Electric Viking:
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.
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