Vehicle production at Tesla's Shanghai plant will undergo its annual production line maintenance work this week as planned, but other workshops, including charging pile production, were not suspended, a Tesla China source said.

(Tesla China video screenshot)

Tesla (NASDAQ: TSLA) acknowledged the suspension of production at the Shanghai plant, though it said a previous report was not entirely accurate.

Tesla's Shanghai plant has maintained efficient production and excellent output in 2022, and the vehicle line will undergo annual maintenance work this week as planned, Global Times said in a report today, citing an unnamed Tesla China source.

Meanwhile, workers are taking a break during production line maintenance after a year of hard work, the person said.

Other workshops, including charging pile production, were not suspended, so the media report of a factory suspension is not entirely accurate, the person said.

Reuters said in a December 24 report, citing an internal notice and two people familiar with the matter, that Tesla suspended production at its Shanghai plant on Saturday, bringing forward its previous plan to suspend most work at the facility in the last week of December.

According to the report, Tesla canceled the morning shift at the Shanghai plant and told all workers they could begin their break.

Earlier this month, China relaxed its zero-Covid policy, a surprise move that was welcomed by businesses and the public but seriously disrupted operations in the short term, the report noted.

Workers at Tesla and its suppliers are getting sick, creating operational challenges in the past week, according to the report.

Tesla delivered 62,493 vehicles in China in November, and the Shanghai plant exported 37,798 vehicles, according to data released by the China Passenger Car Association (CPCA) on December 8.

Tesla's Shanghai plant produces the Model 3 sedan and the Model Y crossover. Notably, the plant not only delivers vehicles to Chinese consumers but is also an export hub for Tesla.

Tesla's pattern is that the vehicles produced in the first half of each quarter are primarily for export, while the vehicles produced in the second half are for local delivery.

Notably, Tesla currently appears to be facing sluggish demand growth in China.

On October 24, Tesla lowered the prices of its full range of Model 3 and Model Y models in China. The EV giant then offered additional discounts to consumers in China in both November and December.

Tesla may need to cut prices further in China in the coming year as it increasingly appears to have a demand problem, Bloomberg said in a December 8 report, citing Sanford C Bernstein & Co analyst Toni Sacconaghi Jr.