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Tesla Has a Production Crisis in China

There are reports of a production crisis for Tesla in China that say Tesla is reducing Model Y production by 20%. Is this true?


Tesla Isn't Reducing Production in China

In a slew of FUD against Tesla, multiple news sourced reported that Tesla was reducing its production by 20% in China. When you read something like this, you have to take it with a grain of salt and try to understand what is happening. Also, I believe Tesla needs a PR team to also be the source of truth so that media outlets can't run wild with stories like this.

Tesla China responded and said these reports were false.

Here's why China is so important for Tesla:

Tesla is an American electric vehicle and clean energy company founded in 2003. In recent years, Tesla has expanded its production to include factories in China. The Chinese market has proven to be crucial for Tesla's success, as the country has the largest electric vehicle market in the world. In response to this demand, Tesla has established a factory in Shanghai, which is known as the Gigafactory 3. This factory is Tesla's first outside of the United States and represents a significant investment in the Chinese market.

The Gigafactory 3 is a state-of-the-art facility that is capable of producing a wide range of Tesla vehicles, including the Model 3 and Model Y. The factory uses advanced manufacturing techniques and is designed to be highly efficient, with the goal of reducing production costs and improving the overall quality of Tesla's vehicles.

In addition to its production capabilities, the Gigafactory 3 also includes a research and development center, where Tesla's engineers and designers can work on new technologies and innovations. This allows Tesla to stay at the forefront of the electric vehicle industry and continue to improve its products.

The Gigafactory 3 has had a major impact on Tesla's operations in China. Since its opening, the factory has been able to produce thousands of vehicles each month, helping to meet the growing demand for electric vehicles in the country. Additionally, the factory has created thousands of jobs in the Shanghai region, providing a boost to the local economy.

Despite the challenges posed by the pandemic, Tesla has continued to invest in its operations in China. In 2020, the company announced plans to expand the Gigafactory 3 and increase its production capabilities. This will allow Tesla to continue to grow in the Chinese market and further solidify its position as a leader in the electric vehicle industry.

Overall, Tesla's production in China has been a major success. The company's investment in the Gigafactory 3 has allowed it to meet the demands of the Chinese market and continue to innovate in the field of electric vehicles. As the demand for clean energy solutions continues to grow, Tesla's production in China will likely play an important role in the company's future success.

No Production Cuts in China

There are no production cuts in China and Tesla debunked this story.

Production cuts are against Tesla's mission. Tesla is trying to transition the world to sustainable energy. Production cuts means going backwards against that mission. It would make more sense for Tesla to cut prices if there was an issue with demand.

Also, since 2018 EV sales are up and gas car sales are down. There were about 82 million cars total sold in 2021. EV sales are now 13% of the total sales of vehicles happening each year. That means about 10 million EVs being sold every year (out of the total vehicle fleet of sales).

China and Europe are going as fast as they can into electrification. Tesla will have a huge advantage as EV adoption continues. Because Tesla can build EVs at scale, they can make them for much cheaper than anyone else. Tesla already has high margins even with two factories not yet ramped (Giga Austin and Giga Texas).

Even in a recessionary environment, Tesla still has a long way to go to reach all customers for vehicles.

What do you think about the news of production reduction in China from Tesla? Should media be reporting false information like that?

For more information, see this video by Farzad Mesbahi:

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Tesla, Screenshot\watch