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Tesla Cuts Production of Model 3 Electric Car at California Factory Amid Semiconductor Shortage

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Tesla Cuts Production of Model 3 Electric Car at California Factory Amid Semiconductor Shortage

Tesla reportedly has temporarily reduced production of its Model 3 compact car amid a global semiconductor shortage that has undermined auto manufacturing.

A production line at Tesla’s Fremont, California, factory suspended output for an expected period of Feb. 22 to March 7, Bloomberg reported, citing an anonymous source.

Tesla did not immediately respond to a request seeking comment Thursday.

The reported shutdown is “likely” related to the worldwide shortage of semiconductors, Wedbush Securities analyst Dan Ives said Thursday in a research note. The shortage has drawn the attention of the White House.

“We believe this shutdown is more around chip shortages (and not demand-driven) which continues to plague GM and other automakers in the near-term, although it appears improvement from a chip perspective is on the horizon for Tesla and others,” Ives said.

Tesla likely has a sufficient supply of previously produced Model 3 cars to meet demand at the moment, Ives said.

However, the company did recently stop selling its lowest-priced Model Y SUV and continued to cut vehicle prices, spurring speculation among some investors that demand could be flagging.

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