Tesla analyst states Giga Shanghai production cut is “NOT” about Chinese competition

(Credit: Tesla China)

Tesla China is expected to cut Giga Shanghai production in December after delivering over 100k units last month. Reports state that the production cut is due to increased competition in China’s EV market. However, Tesla analyst Alexander Potter from Piper Sandler thinks otherwise.

Piper Sandler analyst Alexander Potter argued against Reuters’ claim that Tesla planned to cut Model Y production by 20% in December. However, he also stated that if Tesla does cut Giga Shanghai production, it would “NOT” be due to competition from other Chinese EV automakers. Potter theorized that Tesla might cut Giga Shanghai production due to macro headwinds and Giga Berlin in Germany.

Tesla Model Y production plays a crucial role in the company’s skyrocketing delivery numbers. The Model Y has slowly become Tesla’s top-selling vehicle in many countries. Tesla still aims to make the Model Y the top-selling car of any category across the globe. So cutting Model Y production by 20% might have been difficult to fathom for TSLA bulls. 

However, there is the argument that Tesla Giga Berlin’s Model Y production would lead to Giga Shanghai’s production cut. Currently, Tesla China exports Model Y cars to Europe, but once Giga Berlin starts rolling, it will handle deliveries across Europe. 

Although, Giga Shanghai remains Tesla’s main export hub. So Tesla might decide to export Giga Shanghai’s vehicles to other markets. 

There are still plenty of countries in Asia that would be interested in selling Tesla vehicles. The Philippines, for one, has already started selling the Porsche Taycan and BMW iX. A handful of Tesla vehicles are in the Philippines, but they were bought in a different country and exported to the Philippines. 

Tesla China’s Record-Breaking November

Tesla China sold a record 100,291 vehicles made in Giga Shanghai last month. As of November 2022, Giga Shanghai has delivered over 650,000 units this year. The China Passenger Car Association (CPCA) secretary-general, Cut Dongshu, noted that Tesla China’s annual sales for 2022 might hit 750,000 units. 

Following Tesla China’s record-breaking November production numbers, Bloomberg reported that the Giga Shanghai production would be trimmed down by 20% across the entire plant in December. The publication claimed that Tesla’s production cuts were due to increased competition in the Chinese market. Reuters published a similar report stating that Tesla China planned to cut Model Y production by 20%, not the entire plant. 

Tesla China quickly denied the rumors. Tesla was the second-best-selling EV car brand in the country last month. BYD claimed the top spot, selling 229,942 units in November 2022. BYD manufactures fossil fuel, plug-in, and electric vehicles. 

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Tesla analyst states Giga Shanghai production cut is “NOT” about Chinese competition
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