Tesla will turn the drop in demand for electric cars to its advantage - the company will upgrade the Model Y and Model 3 production lines
Tesla will be able to take advantage of the drop in demand for electric cars to modernize its plant in Shanghai, where the popular Model 3 and Model Y cars are produced.
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Some lines at the Shanghai plant were upgraded in early 2022, boosting capacity to 1 million cars a year. Last month, the plant set a record by producing more than 100,000 cars. Seventy percent of those were Model Ys.
Falling demand is forcing Tesla to purposefully reduce production for the first time. The company has cut the delivery time for cars from 22 weeks in early 2022 to a month. However, the market has not kept up with the pace of production, so the plant's capacity will be reduced by 20% in December.
Tesla will use this to upgrade the production lines where the Model Y and Model 3 are assembled. Employees who work on those assembly lines have already been instructed not to go to work in the last week of this year. The situation could repeat itself in late January, when life in China will come to a halt during the Lunar New Year celebrations.
In addition, since December 12, Tesla is reducing the length of shifts and suspending the recruitment of new employees. Not only that, all employees hired in November will not be able to start their duties until after the Chinese New Year.