Tesla (TSLA.O) intends to keep production at its Shanghai plant at around 93% of capacity through the end of 2022, despite a recent upgrade, two people familiar with the matter said, in a rare move for the U.S. electric vehicles maker.
Since the plant was established in its second biggest market in late 2019, Tesla has aimed at running the plant in China’s commercial hub at full capacity, and recently improved its weekly output by 30%, to a maximum of 22,000 vehicles.
The sources, who spoke on condition they were not named as the matter is confidential, did not give a reason for the decision not to run the facility at full tilt, though one said the figure was smaller than he anticipated.
Tesla failed to instantly respond to a request for comment on Tuesday.
However, the company’s moves come at a time of increased competition from domestic manufacturers of electric vehicles (EV) in a rapidly slowing economy, as consumption drops amid strict COVID-19 restrictions.
The upgraded plant can manufacture 8,000 Model 3s and 14,000 Model Ys, the sources added. Tesla has attempted to keep it running at full capacity, except during the upgrade and a city-wide COVID-19 lockdown for two months in 2022.
Now Tesla intends to produce 20,500 units a week for the remainder of the year, for 7,500 Model 3s and 13,000 Model Ys, the sources said. Tesla’s China sales rose almost 60% in the first eight months of 2022, according to figures from the China Passenger Car Association.
But that pace is much slower than the overall market for new energy vehicles over the same period, which saw sales grow more than twice.
Since August, the company has reduced delivery waiting time in China at least four times, to a minimum of a week now, as well as offering a refund of 8,000 yuan ($1,100) to buyers of Tesla insurance who receive delivery between Sept. 16 and 30.
Analysts have said the moves are seeking to confirm more orders.
In the coming few months, high competition is expected to deepen a price war among EV makers, said Shi Ji, an analyst at China Merchants Bank International.
Tesla sold 60% of its China-made cars in the domestic market during the first eight months, and sold the rest to overseas markets such as Europe, Japan, Australia, and Singapore.
($1=7.1623 Chinese yuan renminbi)