Tesla Shanghai Back At Full Capacity While China Mulls Additional EV Tax Breaks

Tyler Durden's Photo
by Tyler Durden
Wednesday, Jun 15, 2022 - 01:05 AM

Tesla's Shanghai plant has reportedly found itself back at full capacity, according to Ministry of Industry and Information Technology deputy Minister Xin Guobin, who made the statement during a press conference this week.

At the same conference, he talked about how China would begin an industry carbon neutrality campaign and that China is still working on deciding whether or not it will extend tax breaks for the purchase of EVs, a Bloomberg wrap up on Tuesday morning noted.

The country has been mulling whether or not to extend EV subsidies after announcing last year that it was going to conclude them in 2023. Since then, Beijing has been re-thinking the idea amidst slowing demand for autos. Less than a week ago we reported that Chinese auto sales were down 17% year over year. 

China continues to face tough comps, as last year's demand was robust due to pull forward of demand aiming to capture EV subsidies and this year has slowed again due to a new round of Covid lockdowns, we noted.

Meanwhile, Elon Musk has been lamenting a "tough" Q2, blaming Tesla's challenges on China. 

We won't know until Tesla reports its Q2, but for now one of the company's patented leaked internal emails reportedly contains Musk warning his workers that the EV maker needs to get "back on track".

The email reportedly says: “This has been a very tough quarter, primarily due to supply chain and production challenges in China. So we need to rally hard to recover!”

Recall, we just highlighted a Wedbush note from Dan Ives last month that said Tesla's shutdown in China was an "epic disaster" for its June quarter. Ives said he expects to see "modest delivery softness".

Ives also said he is expecting a "slower growth trajectory" in China into the second half of the year and called the headwinds out of Asia "hard to ignore". He also commented that the ongoing Twitter drama "may be a distraction" for Musk at a time when his attention should be focused on dealing with Tesla's issues. 

Recall, we noted weeks ago that "no vehicles were sold in Shanghai last month [April]" as a result of the lockdown, according to an auto-seller association in the city. 

Additionally, it was reported last month that Tesla would be recalling over 100,000 vehicles in China. 107,293 vehicles in China will be recalled "due to safety risks", according to the China People's Daily

The recall, which relates to a defect in the central touchscreen during fast charging, "involves Model 3 and Model Y vehicles produced in the country between Oct 19, 2021, and April 26, 2022," the report said.