Tesla Slows Production at Shanghai Gigafactory Amid Growing Concerns
Key Takeaways:
- Tesla shares dropped over 2% in intraday trading following reports of reduced production at its Shanghai facility.
- Workers at the Shanghai Gigafactory were instructed to operate the factory five days a week instead of the previous schedule of six and a half days.
- The decision to scale back production comes amidst concerns about the cooling EV market and increased competition faced by Tesla.
Tesla shares took a hit in intraday trading on Friday after reports surfaced that the company had slowed down production at its Gigafactory in Shanghai, China. The Gigafactory, where Tesla manufactures its popular Model Y and Model 3 vehicles, has now shifted to operating five days a week, down from its previous schedule of six and a half days, as reported by Bloomberg.
According to sources, Tesla informed its workers and suppliers that these production limitations are expected to remain in place through April. The company has not yet responded to requests for comments regarding this development.
The decision to reduce production at the Shanghai Gigafactory comes at a time when concerns about growth in the EV market are on the rise, coupled with mounting competition for Tesla. Recently, analysts at Wells Fargo and UBS downgraded Tesla’s stock, with UBS going as far as labeling the company a “growth company with no growth.”
UBS analysts have projected that Tesla’s growth could plateau this year before experiencing a decline by 2025. During Tesla’s January earnings call, CEO Elon Musk acknowledged that the high-interest rate environment of recent years has been a hindrance to the company’s revenue. Musk also hinted at a potential surge in demand if interest rates were to decrease this year.
As of 12:20 p.m. ET on Friday, Tesla shares were down approximately 2.2% at $168.88. The electric vehicle manufacturer has faced a challenging start to the year, with its stock price plummeting by more than 30% in 2024.
Conclusion:
The decision by Tesla to reduce production at its Shanghai Gigafactory reflects the current challenges facing the company in an increasingly competitive EV market. With concerns about growth and mounting competition, Tesla is navigating a complex landscape that could impact its future performance. Investors will be closely watching how Tesla adapts to these challenges and whether it can regain its momentum in the coming months.
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