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Tesla denies report of China production cut as deliveries hit new monthly record

For Tesla (TSLA) in China, there's a bit of good news and some potential bad news.

According to Tesla China through news agency Xinhua, the automaker delivered 100,291 EVs from its Giga Shanghai factory in November — an all-time record and the first time it's topped 100,000 deliveries.

The figure represents a 40% rise month-over-month from October and a nearly 90% increase from a year ago. This follows month-by-month increases at Giga Shanghai after Tesla performed upgrades at the factory increase to production.

However, it seems the upgrades may have been too productive, at least in the short term for Tesla. Reports from both Bloomberg and Reuters suggest Tesla will now cut production at Giga Shanghai, a possible sign demand is falling in the region.

Tesla is said to make cuts in production as early as this week, with reductions estimated at around 20% from full capacity. Giga Shanghai was running at full capacity in both October and November.

Bloomberg reports the decision to cut production was made “after the automaker evaluated its near-term performance in the domestic market, one of the people said, adding that there’s flexibility to increase output if demand increases.”

Tesla is denying the reports of a production cut in Shanghai, however. In a statement to Reuters, Tesla said media reports claiming Giga Shanghai would cut December output were "untrue."

That being said, any potential cuts in production come after the automaker decreased prices for its cars in China earlier in October and also increased insurance incentives in order to boost supply.

In addition, competition is heating up in China’s EV market, the world’s largest. BYD, backed by Warren Buffett, posted nearly 230K deliveries last month, with nearly 114K EVs and 116K hybrids.

From a pure output point of view, Gigafactory Shanghai is extremely productive, delivering more than 650,000 vehicles so far this year easily topping last year's total of 484,130, according to the China Passenger Car Association (CPCA). The CPCA said Giga Shanghai's annual sales could possibly hit 750K units in 2022.

Even if Tesla cuts production by 20%, the factory would be producing around 80K units a month, meaning it could theoretically reach nearly 1 million vehicles produced, making it the most productive EV factory in the world.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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