fbpx

Type to search

Tesla’s Shanghai Inventory Builds as EV Recession Looms

Tesla chief executive Elon Musk said that China, Tesla’s second largest market, was in a “recession of sorts”


Tesla vehicles come out of its factory in Shanghai
Tesla vehicles come out of its factory in Shanghai. File photo: Tesla

 

Tesla’s Shanghai electric vehicle inventory grew at its fastest pace ever in October as a recession looms in the world’s largest car market, brokerage data showed.

In October, the US carmaker added 16,002 China-made cars to its inventory in Shanghai, producing 87,706 Model Y’s and Model 3’s in Shanghai but delivering 71,704 vehicles.

That was the biggest gap between production and sales since Tesla opened its Shanghai Gigfactory in late 2019, CMBI data showed.

 

Reuters Graphics
Reuters Graphics

Industry Down-Cycle

While Tesla’s inventory numbers remain low relative to established automakers, building inventory has been a down-cycle indicator for the industry, forcing markdowns in past recessions of the kind Tesla has not yet faced.

Tesla chief executive Elon Musk said that China, Tesla’s second largest market, was in a “recession of sorts”.

The International Monetary Fund expects China’s economy to grow by just 3.2% this year, down from 8.1% last year, and automakers are bracing for Beijing to roll back its subsidies on EVs and hybrids.

Tesla cut prices for its Model 3 and Model Y cars in China last month to boost sales. On Monday, the company offered an additional rebate for buyers who take delivery this month and buy insurance from one of Tesla’s partners.

Covid Challenges

Tesla managed to keep the Shanghai plant running during most of the city’s Covid-19 lockdown and completed an upgrade over the summer that expanded its capacity to 22,000 units per week.

Tesla will need to carry more vehicles in its inventory as a buffer to smooth delivery over the course of a quarter, analysts suggested.

The company reported $2 billion in its inventory at the end of the third quarter, including unsold cars. That was up 60% from $1.2 billion a quarter earlier.

Tesla did not immediately respond to a request for comment.

  • Reuters, with additional editing from Alfie Habershon

 

Read more:

Tesla Outstrips Toyota’s Profit by 8 Times Per Car – Nikkei

Tesla Boosts Insurance Incentive in China to Lift Purchases

Tesla Ships 11,400 Fewer China-Made EVs in October

 

 

 

Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.

logo

AF China Bond