Tesla Inc (NASDAQ:TSLA) CEO Elon Musk on Sunday denied reports of his EV company struggling in China amid increasing competition from domestic automakers and an intense price war.
What Happened: “Our Shanghai factory is running at max capacity,” Musk wrote on social media platform X while reiterating his criticism of mainstream media.
“Believing the news is silly,” the CEO said.
According to Tesla's second-quarter shareholder report, the gigafactory in Shanghai has an annual vehicle production capacity of over 950,000 vehicles, implying a daily maximum capacity of about 2,603 vehicles.
Why It Matters: Tesla sold 86,697 China-made EVs in August, including exports and sales within the country, as per China Passenger Car Association (CPCA) data. The August sales numbers mark a significant growth of 17% compared to July and 3% year-on-year. However, the company’s biggest rival and Chinese EV giant BYD Co sold 148,470 battery electric passenger vehicles last month and 222,384 plug-in hybrid passenger vehicles.
Tesla makes both the Model 3 sedan and the Model Y SUV at its gigafactory in Shanghai. The vehicles made at the factory are sold within China as well as exported to foreign markets including Europe. In the January-August period, Tesla China sold 587,437 vehicles, down 6.01% year-on-year.
Concerns of Tesla losing against competition in China are rising from the company’s dwindling sales numbers, coupled with its aging lineup in a market that is witnessing newer, lower-cost models being launched at a rapid pace. However, the company is reportedly planning to produce a six-seat version of its Model Y SUV starting next year in China.
Tesla dismissed the impact of intense competition in China in its second-quarter earnings report in July and said, “While the automotive market in China remains among the most competitive globally, we feel that our cost structure and focus on core functionality that drives value for customers – including autonomy – position us well for the long-term.”
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