Tesla (TSLA.US) is planning to temporarily halt production of some new Model Y vehicles in China during the Chinese New Year to upgrade its production facilities.

Intellasia Business Insights learned that Tesla Inc. (TSLA.US) plans to suspend some of its new Model Y production lines in China during the Chinese Lunar New Year to better optimize equipment, according to people familiar with the matter. The people said the extended shutdown would allow Tesla to better prepare for the ramp-up of new vehicle production. Model Y is one of the most popular models from the company, which began taking orders for the new version last week and is expected to start deliveries in March. The affected parts of the Model Y production lines are expected to be closed around January 22 to February 14, the people said. They added that another area of the Shanghai factory that produces Model 3s will be closed from January 26 to February 3. It is not uncommon for carmakers in China to suspend production during the Lunar New Year. Tesla faces tough competition in the world's largest auto market, and the new Model Y is a much-needed boost to its product line. Tesla's global vehicle deliveries fell for the first time in more than a decade last year, and it barely held onto its lead as the largest seller of electric vehicles in 2024. In China, the Shanghai factory's annual shipments fell for the first time since it began mass production in 2020, another sign of tough competition. Data showed that Tesla accounted for about 10.6% of China's battery electric vehicle retail sales in the first 11 months of last year, down from nearly 16% in 2020.