By Michael Elkins
According to brokerage data, Tesla (NASDAQ:TSLA) added to its electric vehicle inventory in Shanghai at its fastest pace ever in October. The company produced 87,706 Model 3s and Model Ys, but delivered 71,704 vehicles, leaving a gap of 16,002 China-made cars in inventory. The biggest gap between production and sales since Tesla opened its Shanghai Gigfactory.
Just last month, Tesla CEO Elon Musk said that he believed that China was in a “recession of sorts”. 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 cut prices for its Model 3 and Model Y cars in China last month to boost sales. On Monday, the company offered an additional rebate for buyers who take delivery this month and buy insurance from one of Tesla’s partners.
China Merchants Bank International 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. Tesla reported $2 billion in inventory at the end of the third quarter, including unsold cars. That was up 60% from $1.2 billion a quarter earlier.
Tesla has also been reshaping its retail strategy for China. Last week, Tesla closed its first showroom in China. The electric car maker has been considering closing showrooms in flashy malls and opening larger ones in less-costly suburban locations that can also provide repairs, reflecting a shift in priorities for Tesla’s China team.
Shares of TSLA are up 1.32% in pre-market trading on Wednesday.