Shanghai Shutdown

Something is happening in China - or rather, something ISN’T happening: GigaShanghai has stopped production of their Model 3 vehicles.

Drone operator Wu Wa reported that the activity in the Chinese gigafactory’s Phase 1 and 2 production areas had significantly decreased. Although it looks like Phase 2 - where the Model Y is built - is still seeing some work.

For those wondering, Wu Wa has been reporting on GigaShanghai since the facility opened, so he would certainly be able to tell if production was decreasing.

Now, this didn’t exactly come out of nowhere. Reporting from Bloomberg back in February showed that Tesla China was preparing to halt some of the production at GigaShanghai in order to effect some upgrades. It seems like that was delayed a couple of months, but better late than never.

At the time, everyone was thinking that this was a sign that Tesla’s secretive Project Highland was going to be seeing its debut in China. The Model 3 redesign project has been the subject of some intense scrutiny by the community since information about it leaked in late 2022. Prototypes have been spotted on the roads surrounding the Fremont factory in California for months now.

That doesn’t mean this shutdown confirms anything about Project Highland however. There are a couple of other reasons GigaShanghai could be going through some changes.

The biggest was the subject of a large portion of Tesla’s Investor Day presentation on March 1st. The team was very excited to present a new philosophy they were about to adopt across all their manufacturing sites. This represented a huge change in how they do everything from procuring materials to the way they assemble their products - something that would definitely require halting a whole line to make adjustments for.

On top of that, Tesla is almost constantly making small tweaks to their vehicles. The Model 3 specifically has gone through a couple of minor changes so that they could be accepted for tax rebates and grants through the American Inflation Reduction Act. Tesla could be pushing those changes out to their other locations - and Shanghai could possibly need updates to do that.

However… It's very likely this is all for Project Highland.

GIgaShanghai is one of the most productive Tesla factories, operating in the one market that has the most competition for the company. Project Highland has seen a lot of time in development, and could very well be close to being finalised. It all lines up a little too well for us to dismiss the idea that the first run of Project Highland could be in China.

Whatever the case might be, the original Bloomberg reports said that the upgrades wouldn’t take more than a few days to complete - and with Shanghai’s history of speedy work, that’s likely going to be the case unless the entire production line is being dismantled and put back together.

So, let's wait a week or so, and see what sort of Model 3s roll off the Shanghai lines. Best of luck to the Tesla China team.