Tesla to halt production at Shanghai plant for more upgrades to produce new Model 3, report says

Tesla will halt some production at its Shanghai plant until the end of February in order to begin rolling out a revamped version of the Model 3 in the Chinese market, according to Bloomberg.

Production at Tesla's (NASDAQ: TSLA) Shanghai plant will be disrupted again as the US electric vehicle giant will reportedly upgrade its production lines to produce the new Model 3 sedan.

Tesla will halt some production at its Shanghai plant until the end of February as it upgrades the factory to begin rolling out a revamped version of the Model 3 in the Chinese market, Bloomberg reported today.

The plant has two phases of car manufacturing, and some workers in the first phase will not be allowed on the line starting as early as Sunday as improvements are made, the report said, citing people familiar with the matter.

Tesla has been upgrading the line in stages over the past two months, and deliveries of the new Model 3 are expected to begin later this year, the person said.

Giga Shanghai is Tesla's largest plant in the world, producing the Model 3 sedan and the Model Y crossover, with an annual capacity of about 1.1 million vehicles.

The Model 3 is offered in China in two versions -- an entry-level rear-wheel-drive version and a dual-motor, all-wheel-drive Model 3 Performance. The expected delivery dates for both models are 1-4 weeks, information on Tesla's China website shows.

Including exports of 39,208 units, Tesla sold 66,051 China-made vehicles in January, according to data released earlier this month by the China Passenger Car Association (CPCA).

In China, Tesla delivered 26,843 vehicles in January, including 12,659 Model 3s and 14,184 Model Ys.

With China-made Model Y deliveries beginning in January 2021, Model 3 sales in China have become significantly lower.

For the full year 2022, 124,456 Model 3 units were sold in China, down 17.52 percent from 150,890 units in 2021, according to data from the CPCA monitored by CnEVPost.

For comparison, Model Y delivered 315,314 units in China in 2022, up 85.64 percent from 169,853 units in 2021.

On December 28, Reuters reported that Tesla will run 17 days of production between January 3 and January 19 and will stop production of electric vehicles from January 20 to January 31 to allow for an extended break during the Chinese New Year holiday, citing an internal schedule.

Tesla did not specify the reason for the production slowdown in its output plan, but it is not an established practice to stop production for an extended period during the Chinese New Year, the report noted.

"In fact, most employees at Giga Shanghai will be on vacation from January 20-28, which will be two days longer than the legal holiday, giving everyone the flexibility to schedule their return home," local media outlet Caijing later quoted a Tesla China source as saying.

January 21-27 was the Chinese New Year holiday that just passed.