Tesla struggles as Chinese competition forces production cuts in Shanghai

The influx of electric models from Chinese brands has caused Western products to take a back seat. Tesla, especially its Asian factories, is feeling this impact more and more.

As reported by "Reuters," Tesla's difficult situation is reflected in the production data of its most popular model, the Model Y. Due to weakening demand, Tesla reduced production at its Shanghai factory.

According to anonymous internal sources cited by Reuters, the plan was to cut supply by about 20 percent from March to June 2024. However, the declines ended up being greater.

Data published by the China Association of Automobile Manufacturers (CAAM) shows that in March 2024, 49,498 units left the Shanghai factory, and in April, 36,610 units. That's 17.7 percent and 33 percent less than in the same periods of 2023, respectively.

It is unknown whether Tesla will extend the production reduction decision for the coming months. However, the American brand has to deal with increasingly intense competition in the Chinese market, where it recorded a 6.8 percent share in the first four months of 2024. In comparison, Chinese leader BYD boasts a 34.3 percent share.

Americans are trying to fight back with discounts – in April, Model Y prices in China reached their lowest level since its launch. Time will tell if this strategy will help recoup the losses.