Behind the suspension of production at Tesla’s Shanghai factory (when will Tesla’s Shanghai factory be put into production)

Has Tesla’s Shanghai Gigafactory suspended production?

“Charging piles and other workshops have not been shut down, and the factory shutdown reported by the media is inaccurate.” On December 26, the relevant person in charge of Tesla China told China News Weekly: “The Shanghai factory will still be closed in 2022. Efficient production and excellent output have been maintained. The vehicle production will carry out annual production line maintenance work as planned this week. At the same time, after a year of hard work, personnel will also be rested during the production line maintenance period. ”

As an industry benchmark, Tesla’s every move has attracted intense attention from the outside world. Prior to this, Reuters reported that Tesla's Shanghai factory had suspended production on December 24, according to an internal notice and two people familiar with the matter. Combined with Tesla's recent stock price decline and model price cuts and other news, the outside world has questioned Tesla's weak demand for its models.

Image source: Tesla

The above-mentioned Tesla China person in charge said that Tesla production line maintenance is a "normal action." However, Reuters believes that suspending production during the year-end holidays is not a common practice for Tesla's Shanghai factory. The factory maintained normal operations in the last week of December last year. However, there is also information that some U.S. car companies will suspend production lines for about a week in conjunction with the Christmas and New Year holidays.

Data show that Tesla’s Shanghai Gigafactory delivered more than 100,000 vehicles in November, setting a new monthly delivery record. At the same time, Tesla announced on December 26 that Tesla’s 10,000th super charging pile in mainland China was completed and put into operation in Shanghai.

Running all the way

Data from the National Passenger Car Market Information Joint Conference show that the cumulative delivery volume of Tesla’s Shanghai Gigafactory in the first 11 months has reached 650,000 vehicles, far exceeding the total in 2021. 484,100 vehicles were delivered annually.

According to data, after the expansion of Tesla’s Shanghai Gigafactory, its annual production capacity has exceeded 750,000 vehicles, making it the largest Gigafactory in the world. At present, the localization rate of the Shanghai Super Factory industrial chain has exceeded 95%. Tesla CEO Musk once said that the Tesla produced at Tesla's Shanghai Gigafactory accounts for 1/3 of its total output.

According to TrendForce research, in the third quarter, Tesla’s global sales volume was 344,000 vehicles, with a pure electric vehicle market share of 16, ranking first on the best-selling list. BYD ranked second with sales of 259,000 pure electric vehicles.

However, Tesla, which has been soaring in sales, is still facing pressure. Data shows that Tesla achieved annual sales of nearly 940,000 vehicles globally in 2021. When the full-year financial report was released last year, Tesla set an annual sales growth target of 50% and achieved a sales target of 1.5 million vehicles in 2022. According to data released by Tesla, it delivered more than 900,000 electric vehicles worldwide in the first three quarters of this year. Although it is close to last year's full-year sales, it is still far from its goal.

In order to achieve its goals, Tesla has recently implemented sales stimulus measures in multiple markets. In the U.S. market, Tesla’s initial profit-sharing policy was to provide a $3,750 discount to customers who picked up their cars in the United States in December; subsequently, Tesla decided to provide free 10,000-mile supercharging service to customers who picked up their cars that month; recently , Tesla increased the discount to $7,500, equivalent to the full U.S. electric vehicle tax credit that takes effect in January next year. Data shows that as of the third quarter of this year, Tesla’s market share of newly registered electric vehicles in the United States was 65%, making it the most popular electric vehicle brand in the United States. However, Tesla’s market share this year is lower than 71 in the same period last year. In 2020, Tesla’s market share in the United States even reached 79 at its highest point.

Image source: Tesla

At the same time, Tesla has launched price reduction measures including insurance subsidies in the Chinese market more than once. In October this year, Tesla adjusted the prices of Model 3 and Model Y. Among them, the price of the Model Y rear-wheel drive version has dropped to less than 300,000 yuan, thus entering the "300,000 yuan price threshold" that can enjoy the national new energy vehicle subsidy policy.

In December, Tesla offered insurance concessions, points and other preferential measures.

Tesla’s profit concessions have stimulated market demand to a certain extent. Data from the Passenger Car Association shows that Tesla’s Shanghai Gigafactory delivered 100,291 vehicles in November, a month-on-month increase of about 40% and a year-on-year increase of 89%. Currently, Tesla's Shanghai Gigafactory mainly produces two models, Model 3 and Model Y. Among them, Model Y ranked first in overall passenger car delivery with sales of 69,000 units in November.

Tesla’s Shanghai Gigafactory is an important part of its global manufacturing and sales, and carries the important task of Tesla’s high growth. According to the previous delivery rules, it prioritizes exports at the beginning of the quarter and local delivery at the end of the quarter. Currently, Tesla’s Shanghai Gigafactory supplies overseas markets such as Japan, Australia, New Zealand, and Singapore, and has become an important “export center” for Tesla globally.

The market value has fallen

It is worth noting that Tesla, which was previously "overvalued" and "deified", has seen a significant decline in its market value recently.

Tesla’s market value exceeded US$1 trillion at its peak, which exceeded the combined market value of the world’s 12 largest automakers at the time. But currently, Tesla’s total market value is US$388.9 billion, falling out of the top ten market value of listed companies in the world. Since the beginning of this year, the cumulative decline in Tesla’s stock price has expanded to more than 65%, and its market value has evaporated by US$723.5 billion. December this year was also the worst month for Tesla stock performance. Tesla has lost $219 billion in market value this month, which is almost as much as Toyota Motor Corp., the second-largest car company.

Some institutions believe that Tesla’s stock price mainly reflects the series of negative impacts brought about by Musk’s acquisition of Twitter. Musk said he would resign from the post after finding a suitable CEO candidate for Twitter. Some analysts also believe that Tesla's growth rate is slower than expected, resulting in a decline in market value. Musk responded to investors on Twitter on December 20, saying that the decline in Tesla’s stock price was related to the withdrawal of funds from the capital market.

However, although Tesla’s current market value has dropped significantly, it is still far ahead of other automakers, equivalent to the three major automakers Ford, General Motors, and Toyota combined, and its 2021 cars The sales volume is only 5% of the three major cars. Gordon Johnson, head of Tesla's largest short-seller investment research company GLJ Research, believes that Tesla's stock price will fall in 2023 because Tesla's valuation is still overvalued by investors compared with other electric vehicle companies.

It is worth noting that Musk has sold more than $39 billion in Tesla stock since Tesla’s market value reached its peak. After the market closed on December 22, Musk promised investors on Twitter Spaces that he would not sell any Tesla shares in the next 18-24 months. “I promise that I will not sell any Tesla shares for at least two years from now. I will not sell Tesla stock under any circumstances next year."

At the same time, Musk said that the U.S. economy will enter a "severe recession" in 2023, which will affect real estate, automobiles, etc. industry. As early as June this year, Musk said that "the economy feels very bad" and asked Tesla executives to suspend all recruitment and lay off 10 people. Now it seems that Musk's judgment on economic trends has not changed.

So, can Musk lead Tesla to avoid this "severe recession"?

Author: Liu Shanshan