Tesla plans to cut December output of the Model Y at its Shanghai plant by more than 20 percent from the previous month, two people with knowledge of electric vehicle maker’s production plan said.

The planned production cut comes after Tesla reported record sales in China for November.

The Tesla representative replied “false news,” without elaborating. The spokesman did not reply to Reuters questions about whether Tesla was denying any output reduction would take place or whether the move was linked to weaker demand.

Tesla shares were down 2.1 percent in premarket trading in New York, off earlier lows after the company’s statement.

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Inventory levels at Tesla’s Shanghai plant rose sharply after it completed an upgrade of the manufacturing facilities in the summer, with EV inventory increasing at its fastest pace ever in October.

The US automaker has cut prices for Model 3 and Model Y cars by up to 9 percent in China and offered insurance incentives, which helped boost November sales of its China-made cars by 40 percent from October and by 89.7 percent compared to a year earlier.

Tesla delivered 100,291 China-made EVs in November, the highest monthly sales since its Shanghai factory opened in late 2020, Xinhua reported citing Tesla.

The company’s high inventory levels in Shanghai come as China’s auto market faces slowing demand and disruptions to local supply chains.

Uncertainty over when China will make significant moves to relax its “dynamic zero-COVID” strategy has clouded the outlook for the world’s largest car market, though some Chinese cities have taken steps to ease some restrictions following protests in recent weeks.

Globally, Tesla had planned to push production of the Model Y and Model 3 EVs sharply higher in the fourth quarter as newer factories in Austin, Texas and Berlin ramp production, Reuters reported in September.

The carmaker plans to start production of a revamped version of Model 3 in the third quarter of 2023 in Shanghai, as it aims to cut production costs and boost the appeal of the five-year-old electric sedan, Reuters has reported.

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