Tesla Suspends Model Y and Cybertruck Production at Austin Gigafactory for Memorial Day Week Amid 13% Drop in Q1 Deliveries

Tesla has paused Model Y and Cybertruck production at its Austin, Texas Gigafactory for Memorial Day week, amid a broader reduction in overtime hours. This follows a 13% drop in vehicle deliveries in Q1 2025. Workers report inconsistent schedules and limited communication from management, raising concerns about production stability. The pause is part of operational adjustments, including reduced Cybertruck output and reassignment of workers to the Model Y line. Tesla faces demand challenges, with a growing inventory surplus, particularly of the Cybertruck. A contractor also laid off 50 workers at the facility this month.

Memorial Day Week Production Pause

According to multiple workers who spoke with Business Insider, Tesla notified employees earlier this week that production on the Model Y and Cybertruck lines would be halted for the entire week of Memorial Day. The workers, who are paid hourly, were given the option to use paid time off or report for non-production duties such as cleaning and training. However, no vehicle assembly work will take place during the break.

The week-long pause is notable because production lines were operational during the same period last year. Workers described the break as unusually long and said it reflects a broader trend of reduced activity at the Austin plant in recent months.

Overtime Restrictions and Scheduling Instability

Since February, Tesla has significantly curtailed overtime at the Austin facility. Workers report that management warned them against clocking extra hours, with some being told they could face disciplinary action for doing so. This crackdown on overtime has coincided with a pattern of inconsistent scheduling. Several employees said they had been sent home early on multiple occasions, and shifts have become increasingly unpredictable.

The reduction in overtime and the Memorial Day production halt are part of a series of operational adjustments that have affected worker morale and raised questions about Tesla’s short-term production strategy.

Cybertruck and Model Y Production Adjustments

Tesla has been making changes to its production targets, particularly for the Cybertruck. In April, Business Insider reported that the company had scaled back its Cybertruck output and reassigned some workers to the Model Y line. The Cybertruck line was also temporarily shut down for three days in December 2024.

As of March 20, Tesla had delivered fewer than 50,000 Cybertrucks, according to a voluntary recall notice. The vehicle has faced production challenges and a recent recall from the National Highway Traffic Safety Administration due to a defect involving an exterior panel that could detach while driving.

Despite being Tesla’s best-selling model, the Model Y has also shown signs of weakening demand. A refreshed version of the vehicle was released in January, but it has not matched the sales performance of previous updates. In April, Tesla began offering discounts on the Model Y and introduced a cheaper variant in early May.

Delivery and Production Data

Tesla reported a 13% year-over-year drop in vehicle deliveries for the first quarter of 2025. The company produced nearly 26,000 more vehicles than it delivered during the quarter, even after a production decline of nearly 100,000 units compared to the previous quarter. This growing inventory surplus has been particularly evident with the Cybertruck, with reports indicating that over 10,000 units remain unsold.

The delivery shortfall and production imbalance suggest that Tesla is grappling with demand-side challenges, especially for newer models like the Cybertruck. The company’s decision to pause production and reduce overtime appears to be a response to these market conditions.

Workforce Impact and Layoffs

The operational slowdown has had a direct impact on workers at the Austin Gigafactory. In addition to the Memorial Day week shutdown, Trigo, a contractor that supplies labor to Tesla, laid off 50 employees at the facility earlier this month, according to a Worker Adjustment and Retraining Notification (WARN) notice filed with the Texas Workforce Commission.

Tesla employees have expressed frustration over the lack of clear communication from management regarding production plans and scheduling. Some workers said they were not given advance notice of shift changes or early dismissals, making it difficult to plan their time and finances.

Broader Context

Tesla’s stock is down approximately 26% year-to-date as of early May 2025. During a March event with former President Donald Trump, CEO Elon Musk stated that Tesla plans to double its U.S. vehicle production over the next two years. However, the current production cuts and delivery declines suggest that the company is facing near-term headwinds.

Tesla has not responded to multiple requests for comment regarding the Memorial Day production halt, overtime policy changes, or delivery performance.

Tesla Suspends Model Y and Cybertruck Production at Austin Gigafactory for Memorial Day Week Amid 13% Drop in Q1 Deliveries

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