Tesla drops 11.4% for a holiday in China

Tesla plans to run a reduced production schedule at its Shanghai plant in January, extending the slowdown in operations that began this month into next year. This caused a stock market crash.

The electric car maker will operate with reduced production for 17 days, from January 3 to 19, and halt production of electric vehicles from January 20 to 31 during an extended Chinese New Year break, according to the plan seen. by Reuters.

On the news, the station’s shares sank 11.41% to $109.10 on Tuesday on Nasdaq. In 2022 it has lost about 70% of its value.

The company did not specify the reason for the production slowdown in its plan. It was also unclear whether work would continue off the Model 3 and Model Y assembly lines at the plant during the scheduled downtime. It has not been an established practice for Tesla to shut down operations for an extended period for the Chinese New Year.

Tesla suspended production at its Shanghai plant on Saturday, ahead of an established plan to halt most work at the plant in the last week of December, Reuters reported.

The latest production cuts in Shanghai come amid a rising wave of infections, after China began gradually lifting its zero-COVID policy earlier this month. That measure has been welcomed by companies, although it has disrupted manufacturing operations.

Like other automakers, Tesla has also faced declining demand in China, the world’s biggest auto market. Earlier this month, Tesla offered an additional incentive to buyers who picked up the vehicles in December. The company has offered price cuts for Model 3 and Model Y cars of up to 9% in China, as well as a subsidy for insurance costs.

The Shanghai factory, the most important manufacturing hub for Elon Musk’s electric vehicle company, maintained normal activity during the last week of December last year and took a three-day break for the Chinese New Year.

The period between January 21 and 27, 2023 is a holiday in China for the Chinese New Year.

The plant in Shanghai, a complex that employs about 20,000 workers, accounted for more than half of Tesla’s production in the first three quarters of 2022.

It has set a target of growing 50% in electric vehicle production and deliveries in 2022. Analysts expect output to fall short of that target and to be around 45%, based on forecasts for the soon-to-end fourth quarter.

price bubble

Used Tesla prices are falling faster than other automakers and clean energy status symbols are languishing on dealer lots longer, industry data provided to Reuters showed.

The brand’s median used car price for November was $55,754, down 17% from the July high of $67,297. The overall used car market fell 4% during that period, according to Edmunds.

Used Teslas were in dealer inventory for 50 days on average in November, compared to 38 days for all used cars.

Rising gasoline prices, an effect of the Ukraine war, boosted demand for Tesla.