Exclusive-Tesla plans 2-week suspension for most Shanghai production for upgrade - memo

© Reuters. A Tesla sign is seen at its factory in Shanghai, China, May 13, 2021. REUTERS/Aly Song

SHANGHAI (Reuters) -Tesla Inc plans to suspend most production at its Shanghai plant in the first two weeks of July to work on an upgrade of the site, according to an internal memo seen by Reuters.

After the upgrade, the U.S. automaker aims to boost the plant's output to a new record high by the end of July to get closer to its goal of producing 22,000 cars per week in Shanghai, according to the memo.

A two-month-long COVID lockdown in Shanghai delayed Tesla (NASDAQ:TSLA)'s original plan of reaching production of 8,000 Model 3s and 14,000 Model Ys per week at the Shanghai plant by mid May, two people familiar with the matter told Reuters previously.

The Shanghai factory has been churning out 17,000 Model 3 and Model Y cars per week since mid June, according to previous memos seen by Reuters.

Tesla did not immediately respond to a request for comment.

"Our constraints are much more in raw materials and being able to scale up production," said Tesla CEO Elon Musk at the Qatar Economic Forum organised by Bloomberg on Tuesday.

"We are increasing production capacity as fast as humanly possible," he added.

Production at the Tesla Shanghai factory is on track to fall by over a third this quarter from the first three months of the year as China's zero-COVID lockdowns caused deeper disruptions to output than Musk had predicted.

Last year, Tesla's China-made cars, which were sold locally and to overseas markets such as Europe and Australia, accounted for around half of the 936,000 vehicles it delivered globally, based on Reuters calculations using China Passenger Car Association data.

Customers in Australia now have to wait until the first quarter of 2023 for their Model Ys while those in Europe can only pick up their cars at the earliest in the fourth quarter of this year, its website showed.

For buyers in China, the waiting time for Chinese-made Tesla cars is between 10 and 24 weeks, the website showed.