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Sources familiar with the matter report that Tesla Inc. is currently reducing its workforce of electric-vehicle battery workers at its Shanghai factory. This adjustment comes as the intense price competition among Chinese manufacturers gradually diminishes.

The car manufacturer is now informing employees who work on the battery assembly lines about this decision. Although they haven’t revealed the reasons for the layoffs, they have given some workers the chance to move to positions in stamping, painting, or general assembly. The precise number of employees affected by these changes is currently unknown, and Tesla representatives in China have not yet provided responses to requests for comments.

Tesla’s Shanghai factory, employing approximately 20,000 workers, possesses the capacity to manufacture about 1 million electric vehicles (EVs) annually. This facility contributes to more than half of the company’s global production output. For the assembly of batteries from LG Energy Solution and Contemporary Amperex Technology, which require assembling before installation into the vehicles, Tesla operates its battery workshop to carry out a significant portion of this assembly process.

Sources indicate that Tesla is developing automation equipment to take over human labor in battery production. The design and construction phase of this equipment is currently underway.

Tesla has been doing really well lately, both in China and in other countries. In June, the number of cars they made in their Shanghai factory went up by almost 20% compared to the year before. They made 93,680 cars in total. Also, in the last three months, they set a new record for how many cars they delivered all around the world.

But there’s a small problem. In the first part of this year, the money they made from each car they sold went down to 11.4%. This is the lowest it’s been in about two years. The reason for this is that they made their electric cars cheaper in January and March. The boss of Tesla, Elon Musk, made the cars cost less on purpose, even if it means they don’t make as much money for each car.

To stop this from happening again, the people who make rules in China got together with Tesla and some other big Chinese car companies. They talked about making sure everyone follows the rules and doesn’t make the prices of their cars too weird. As a result of this talk, Tesla said they will give people who buy their Model 3 and Y electric cars in China some extra benefits. Like, if someone who already owns a Tesla tells someone else to buy one, the new person will get 3,500 yuan (which is about $480) as a reward.

Even though Tesla is selling a lot of cars in China, they’ve decided to hire fewer people to work on making batteries at their Shanghai factory. This matches with the recent calming down of the fight over prices among Chinese car companies. Tesla is really focused on using machines to do things and adapting to what’s happening in the market. This shows that they want to stay strong and do well in the very competitive electric car business.

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