Tesla (TSLA) is hitting the brakes on output from its China plant through the end of the month in order to upgrade production lines. TSLA shares jumped early Wednesday.
The world’s leading EV maker will pause operations at its Shanghai plant so that it can retool the facility for new Tesla Model 3 production lines, Bloomberg reported early Wednesday. This would be the third shutdown of the Shanghai plant in less than three months.
It is also the industry’s second major EV interruption this week. Ford Motor (F) on Tuesday said it stopped production and shipments of its all-electric F-150 Lightning pickup truck because of unspecified battery issues.
Tesla upgraded production lines in stages over the past two months, with deliveries of the new Model 3 sedan expected to begin later this year, according to Bloomberg. The global EV giant has not confirmed reports of a new Model 3.
Tesla planned to produce an average of nearly 20,000 vehicles a week at its Shanghai plant in February and March, according to Reuters. The company expected monthly production to roughly reach September levels of 82,000 vehicles.
Last year, Tesla Shanghai upgrades affected company output in July and early August.
Tesla stock advanced around 2% Wednesday during premarket trading. On Tuesday TSLA shares surged 7.5% to 209.25. Tesla stock is up about 106% from its Jan. 6 bear market low of 101.81. Until Friday, Tesla stock had been on a run of eight straight sessions with gains.
Tesla Stock And China
Tesla’s aging Model 3 sedan has seen waning demand, especially in China. The EV company faces rising competition in China from rivals BYD (BYDDF), Li Auto (LI) and Nio (NIO), with competitor’s sales surging as they roll out new model lines. Vehicles including the BYD Seal, Nio ET5 and other EVs are all nibbling away on the popular Tesla Model 3’s market.
Last week, Tesla insurance registrations in China dropped nearly 20% even as China’s overall passenger car market recovered from the Lunar New Year holiday.
Tesla had 6,963 insurance registrations for the week of Feb. 6-12. That was down 19%, after registrations had surged to 8,643 in the week prior. Of the Feb. 6-12 insurance registrations, 1,096 were Tesla Model 3 vehicles while there were 5,867 registered Tesla Model Y vehicles.
This comes after Tesla on Friday raised the base Model Y price in China by 2,000 yuan ($295) to 261,900 yuan ($31,569). That follows a cut of 29,000 yuan on Jan. 6, which were part of sweeping, across-the-board cuts in China and Asia.
Tesla sold 66,051 China-made vehicles in January, a 10.4% increase compared to a year ago and up 18.4% vs. December. Of those deliveries, the global EV giant exported 39,208 vehicles from its Shanghai plant. Tesla tends to focus on exports from Shanghai in the first part of the year.
TSLA shares rank fourth in IBD’s Auto Manufacturers industry group. Tesla stock has an 68 Composite Rating out of 99. The stock has an 20 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 99.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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