Tesla, Inc. (TSLA.US) plans to temporarily suspend some new Model Y production lines in China during the Spring Festival for upgrades.

According to sources familiar with the matter, Tesla, Inc. (TSLA.US) plans to temporarily halt production of some new Model Y production lines in China during the Chinese Lunar New Year in order to optimize equipment better. The sources said that the extended shutdown will allow Tesla, Inc. to better prepare for increased production of the new model. The Model Y is one of Tesla, Inc.'s best-selling models, and the company started accepting orders for the new model last week, with deliveries expected to begin in March. The sources said that the affected Model Y production lines will be shut down around January 22 to February 14. They added that another area in the Shanghai factory that produces the Model 3 will be closed from January 26 to February 3. It is not uncommon for Tesla, Inc. or any car manufacturer in China to halt production during the Lunar New Year. Tesla, Inc. faces fierce competition in the world's largest car market, and the new Model Y has injected much-needed boost to Tesla, Inc.'s product line. Due to weakening demand, Tesla, Inc. saw its global car deliveries drop annually for the first time in over a decade last year, barely maintaining its lead over BYD Company Limited in 2024 as the largest electric car sales company. In China, Tesla, Inc.'s annual shipments from the Shanghai factory saw their first decline since mass production began in 2020, another sign of intense competition. Data shows that Tesla, Inc. captured around 10.6% of China's retail sales of battery electric vehicles in the first 11 months of last year. In 2020, Tesla, Inc.'s market share was close to 16%.