Tesla’s (TSLA) sales in China are down more than 60% month-to-month in July, but Gigafactory Shanghai’s planned upgrade is to blame.
After a tough Q2 in China due to the restrictions in the city of Shanghai forcing Tesla to shut down its factory, the automaker started to ramp production back up again with 78,906 vehicles and exported 968 in June 2022.
Today, the China Passenger Car Association (CPCA) released its July numbers and confirmed that Tesla sold 28,217 Chinese-made vehicles and exported 19,756 vehicles in July 2022.
Those numbers are down significantly month-to-month, but it is understandable considering Tesla had another shutdown at Gigafactory Shanghai in July – though this time it was planned.
At the end of July and through the first week of August, Tesla shut down its most productive factory in order to perform upgrades that it believes will increase capacity to about 21,000 vehicles per week or 1 million vehicles per year.
This factory upgrade is likely also going to affect Tesla’s results in August, but the automaker should be able to catch up going forward with the new capacity.
In recent years, Gigafactory Shanghai has become Tesla’s most productive factory, and the automaker turned it into its “export hub” – exporting many Model 3 and Model Y vehicles to European and Asia-Pacific markets.
But it also supplies the Chinese market with Tesla vehicles, and it remains the most important market for Tesla and other EV automakers.
China’s overall passenger car sales in July jumped 20.1% year-over-year to 1.84 million units, and electric vehicles accounted for an impressive 26.4% of the total sales. That number also includes plug-in hybrids.
BYD is leading the dance with a record 163,042 electric vehicles delivered in July, but more than half are plug-in hybrids.
When it comes to all-electric vehicles other than Tesla’s, Nio and Xpeng respectively delivered 10,052 and 11,524 units in the market in July.
Based on the timing of the factory upgrade, I think August and September might not be the best months to look at since Tesla could still be ramping up the new capacity during that time.
But Q4 could be really interesting. I can see Tesla delivering 250,000 vehicles out of Gigafactory Shanghai alone in Q4.
Likely 150,000 from Fremont factory. That would already be a record of 400,000 units and then Gigafactory Berlin and Texas are hard to predict, but they would hopefully start to contribute significant outputs by then.