Tesla Inc. plans to temporarily suspend part of its Model Y production lines at its Shanghai Gigafactory for some three weeks around the Chinese New Year holiday, Bloomber reports.
The move is aimed at optimizing equipment for the recently refreshed Model Y, according to sources familiar with the matter.
The affected Model Y lines are expected to be shut down from around January 22 to February 14. This extended halt will allow Tesla to more effectively prepare the lines for an anticipated ramp-up in production of the updated SUV, the sources stated, who requested anonymity due to the sensitivity of the information.
Additionally, a portion of the Shanghai factory responsible for producing the Model 3 sedan will be closed from January 26 to February 3.
While production halts are common for automakers in China during the Lunar New Year holiday, this particular pause comes as Tesla faces increasing competition in the world’s largest automotive market. The refreshed Model Y, which began taking orders last week, is seen as a vital offering to invigorate Tesla’s lineup. Deliveries are slated to begin in March.
Priced from 263,500 yuan ($35,900), the redesigned Model Y features a new exterior aesthetic, including a distinctive thin LED light bar across the front, echoing the design of the Cybertruck. Minor interior changes are also included. The upgrade is seen as necessary for the model which had seen only minimal alterations since its debut five years ago.
This production pause comes against the backdrop of broader challenges for Tesla. The company experienced its first annual decline in worldwide vehicle deliveries in over a decade last year and narrowly maintained its position as the top seller of fully electric vehicles in 2024, edging out Chinese rival BYD Co.
Furthermore, Tesla’s Shanghai plant, a key production hub, witnessed its first-ever drop in annual shipments since it began mass production in 2020, reflecting the heightened competitive landscape in China.
Data compiled by Bloomberg Intelligence from the China Automotive Technology and Research Center shows that Tesla accounted for some 10.6% of total battery electric vehicle retail sales in the first 11 months of last year, a significant drop from the 16% market share it held in 2020.
The production optimization at the Shanghai factory demonstrates Tesla’s efforts to remain competitive despite these challenges. The refreshed Model Y and production strategy will be closely watched by industry analysts and consumers as Tesla navigates a shifting automotive landscape in China. The factory closures will coincide with the peak of China’s Spring Festival travel period, which begins on January 29th, with expectations of around 9 billion domestic trips being made across the country.
