Tesla Inc. has reportedly made the decision to lay off battery production workers at its Gigafactory in Shanghai, China. The move comes as competition in the Chinese market intensifies, leading car manufacturers to significantly reduce prices. Although there is no official confirmation of the number of workers affected, sources indicate that more than 50% of the battery cell assembly line workforce could be at risk.
The Shanghai Gigafactory, Tesla’s largest and most productive plant, is responsible for manufacturing Model 3 and Model Y cars at a rate of 1 million vehicles per year. With around 20,000 employees, the factory has been operating with ample battery assembly capacity on its two production lines, capable of producing 3,400 batteries, which exceeds the current demand for vehicle production.
While Tesla utilizes batteries from LG Energy Solution Ltd. and Contemporary Amperex Technology Co. Ltd., the cells still need to be integrated into battery modules and packs before being installed in the vehicles. This process is primarily conducted at the factory’s battery workshop. However, the company is reportedly planning to introduce automation equipment to reduce dependency on human labor and increase efficiency on the battery production line.
The layoff decision may also be partially connected to the US government’s prohibition on subsidies for batteries imported from China. Local car companies are required to use batteries manufactured in the US to comply with this policy. However, Tesla’s vehicle manufacturing-related jobs have not been impacted yet, as sales of their vehicles in China remain strong.
Some affected workers have been offered the option to transfer to other workshops within the factory, such as painting, stamping, or general assembly. This provides an opportunity for employees to continue their employment at the Gigafactory.
Despite these layoffs, Tesla continues to thrive in the Chinese market. In the previous month, the company sold a total of 93,680 vehicles manufactured in China, including exports. This represents the second-highest sales figure on record, following the 100,291 vehicles sold in November 2022.
Tesla’s decision to reduce the number of battery production workers in Shanghai reflects the challenging landscape of the Chinese market, with intense competition driving down prices in the automotive industry. The company’s focus on streamlining operations and increasing automation could help minimize costs and enhance efficiency in the production process.
As Tesla adjusts its workforce and production strategies, it remains to be seen how these changes will impact the company’s operations in China and its ability to meet growing demand for electric vehicles in the region.
