6/6/2023 0 Comments Tesla inventory![]() ![]() ![]() It affected the market so much that Tesla felt the need to raise the Model Y price several times to match demand with production. ![]() This abrupt adjustment surprised everyone and helped Tesla clear inventories. The most discounted trims were Performance and Plaid, with the lowest cuts for the base-version Model 3. This significantly eased the demand problem, as the Chinese market absorbed some vehicles that would’ve been exported to Europe otherwise.īut the problem was dealt with bluntly in January, when Tesla decided to slash up to 20% off the sticker price for some models. This could’ve been a valid explanation had Tesla not dropped the prices in China toward the end of 2022. Some vehicles were also kept in inventory until delivery. The EV maker explained that ramping up production at Giga Berlin and Giga Austin and increasing output at Giga Shanghai shortened delivery times. 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, Reuters reported previously.Tesla had to confront a demand problem in Q4 2022 as inventories started to build up in all major markets. That reflects a shift in priority for Tesla’s China team from ramping up output at the Shanghai Gigafactory to focusing on its sales strategy, one person with knowledge of the discussions said. Tesla has been considering closing showrooms in flashy malls and opening larger ones in less-costly suburban locations that can also provide repairs. Last week, Tesla closed its first showroom in China, a high-end location in a Beijing mall. Tesla has also been reshaping its retail strategy for China. That was up 60% from $1.2 billion a quarter earlier. The company reported $2 billion in inventory at the end of the third quarter, including unsold cars. Some analysts have said Tesla will need to carry more vehicles in inventory as a buffer to smooth delivery over the course of a quarter. Tesla’s pattern has been to produce more vehicles at the beginning of a quarter and to focus on deliveries in the closing weeks, a practice Musk has said the company is working to change by better pacing deliveries. Unlike traditional automakers, Tesla distributes through its own stores, rather than dealers, and so is left to hold and finance any inventory that has not been delivered to buyers. Hong Kong-based CMBI has been bearish about the outlook for China’s auto market, saying in a note last month that it expects a slowdown in retail demand in 2023 and citing a growing inventory of unsold cars as a concern. On Monday, the company offered an additional rebate for buyers who take delivery this month and buy insurance from one of Tesla’s partners. Tesla cut prices for its Model 3 and Model Y cars in China last month to boost sales. The International Monetary Fund expects China to grow just 3.2%this year, down from 8.1% last year, and automakers are bracing for Beijing to roll back subsidies on EVs and hybrids. Tesla Chief Executive Elon Musk said last month China, Tesla’s second largest market, was in a “recession of sorts". 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.
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