Tesla (NASDAQ: TSLA) stock fell more than 1% in pre-market trading on Monday amid reports of production cuts in China, sparking worries about possible disappointing delivery figures.
Tesla, the electric vehicle (EV) giant, has reportedly reduced its EV production in China due to a slowdown in new-energy vehicle sales and heightened competition in the world’s largest auto market.
Bloomberg News has reported that Tesla has modified the work schedule at its Shanghai facility from six and a half days to five days per week for its employees. This adjustment impacts the production of its Model Y SUV and Model 3 sedan.
The change, as reported, took place earlier this month, with no clear indication of when production will return to its former pace.
This development emerges at a sensitive time as Tesla gears up to disclose its first-quarter sales in less than fourteen days. Investors might link the speculated production cut to a decelerating demand for Tesla vehicles in China, a pivotal market where the company is up against nimble domestic EV startups.
Data from China reveals a 6.8% week-over-week drop in Tesla’s insurance registrations, landing at 12,300 units for the week ending March 17th. Moreover, data from the China Passenger Car Association shows that Tesla’s wholesale sales in China, encompassing domestic sales and exports, hit 131,812 units in the first two months of 2024, signifying an 8% year-over-year drop.
China represents a vital market for Tesla, offering higher profit margins for vehicles produced there compared to other factories. Tesla analysts and observers express concern that the company may only marginally exceed its first-quarter delivery tally of 422,875 units from the previous year.
Tesla (NASDAQ: TSLA) Stock Movement
TSLA stock declined 1.15% to close at $170.83 on Friday. The traders had exchanged hands with 75,029,015 (75.02 million) shares compared to the average daily trading volume of 103.98 million.
