Two people with knowledge of the matter said that Tesla plans to hold production at the Shanghai plant until the end of year, despite a recent upgrade, which is a rare move for the US maker of electric vehicles.
Since opening in its second largest market in late 2019, Tesla has sought to run the facility at full capacity in China's commercial hub, and recently increased its weekly output by 30% to a maximum of 22,000 vehicles.
Sources who spoke on condition of anonymity did not give a reason for the decision not to run the plant at full tilt, though one said the figure was lower than expected.
Tesla did not respond to a request for comment on Tuesday.
The move comes at a time of growing competition from domestic manufacturers of electric vehicles EV in a weaker economy, as consumption falls due to strict COVID 19 curbs.
The upgrades can produce 14,000 Model Ys and 8,000 Model 3s, according to the sources. Tesla is trying to keep it running at full capacity, except during the upgrade and a city-wide COVID 19 lock down for two months this year.
The sources said that Tesla plans to turn out 20,500 units a week for the rest of the year, for a total of 13,000 Model Ys and 7,500 Model 3s.
In the first eight months of this year, Tesla's China sales jumped more than 60%, according to figures from the China Passenger Car Association.
The sales of new energy vehicles were more than double in the same period, and that pace is much weaker than the overall market for new energy vehicles.
Since then, the company has cut delivery times in China at least four times, to a minimum of a week, and offered a rebate of 8,000 yuan $1,100 to buyers of Tesla insurance who take delivery between Sept. 16 and 30.
Analysts say the moves aim to lock in more orders.
Shi Ji, an analyst at China Merchants Bank International, said rising competition is expected to intensify the price war among EV makers over the next few months.
During the first eight months, Tesla sold 60% of its China-made cars in the domestic market and exported the rest to overseas markets such as Australia, Europe, Japan and Singapore.