Tesla has cut prices in China for the second time in less than three months.
Shanghai:
Tesla cut prices in China for the second time in less than three months on Friday, fueling forecasts of a wider price war amid weak demand in the world’s biggest auto market.
The US automaker also cut prices of its best-selling Model Y and Model 3 electric vehicles in Japan, South Korea and Australia, which a person with direct knowledge of the plan said would help stoke demand for output from Shanghai. was part of the effort. factory, its largest production center.
It’s the first major move since Tesla hired its chief executive for China and Asia, Tom Zhu, to oversee global production and deliveries, at the center of the company’s recent challenges after falling short of its 2022 delivery target. Used to be.
Tesla shares fell 2.5% in active trading on Friday. The stock has lost 70% of its value in the last year.
Automakers have long turned to incentives to control inventory, but, as of late last year, Tesla was able to hold prices steady or even raise them because of strong orders.
But last month CEO Elon Musk said “radical interest rate changes” affected the affordability of all cars, new and used, and Tesla may cut prices to maintain volume growth.
The latest cuts in China, along with another in October and recent incentives for Chinese buyers, mean a 13% to 24% reduction in Tesla prices from September in its second-biggest market after the United States, according to Reuters. It is found from the calculations.
Tesla has slashed the prices of all its Model 3 and Model Y cars in China by 6% to 13.5%, according to Reuters calculations based on website prices. The starting price of the Model 3 was reduced from 265,900 yuan to 229,900 yuan ($33,427).
Grace Tao, Tesla’s vice president in charge of external communications in China, said on Weibo that the price cuts in China reflected engineering innovation and responded to Beijing’s call to stimulate economic growth and consumption.
Tesla’s deliveries of China-made cars fell to the lowest in five months in December. Tesla’s Shanghai plant, which was expanded last year, also exports vehicles to Europe.
So far, there is no sign of Tesla cutting prices in Europe, where November sales rose 93% year-on-year and the Model Y was the best-selling car, according to sales data from research group JATO Dynamics . Second time in 2022.
Tesla’s share of Europe’s battery electric vehicle (BEV) market jumped 18.9% in November, up from 12.3% in the same month a year earlier.
end subsidy
The cuts came days after Beijing ended a subsidy program, a move with Tesla and rivals bearing the brunt of softening demand.
China Merchants Bank International (CMBI) said Tesla may have to do more, especially as competition from Chinese rivals intensifies.
“Tesla needs to further cut prices and expand its sales network among older models in China’s lower-tier cities,” said CMBI analyst Shi Jie.
“We expect new EV production capacity in China to exceed new demand in 2023.”
But Sun Shaojun, a popular auto blogger in China, said on Weibo that Tesla’s price cut was so great that other automakers, including big rival BYD, would have to respond.
BYD recently increased the prices of its best-selling models after the end of government subsidies.
After the price cut, Tesla’s Model 3 was priced roughly $1,000 more than BYD’s Sealed model, launched in July. The Model 3 is now priced on par with BYD’s best-selling Han EV.
BYD declined to comment on competitors’ pricing, but said it would adjust itself according to changes in market demand.
BYD, which sells both plug-in and pure electric vehicles, saw its retail sales in China double in December, while Tesla’s fell 42%, according to CMBI data.
projects planned
Some Tesla owners in China who took delivery in recent months and did not qualify for lower prices said on Friday they planned protests at their showrooms in Shenzhen and Henan, screenshots of social media chats seen by Reuters showed. were shown.
Tesla had no additional comment. A Tesla spokesperson referred Tao’s Weibo post to Reuters.
China’s prices for Model 3 and Model Y cars are now 24% to 32% lower than those in the United States, Tesla’s biggest market, Reuters calculations reflected a range of factors including material and labor costs.
Tesla also cut the prices of the Model 3 and Model Y in Japan by about 10% for the first time since 2021.
In the United States, the Model Y and Model 3 are eligible for up to $7,500 in clean vehicle tax credits as of this month under the Biden administration’s Inflation Reduction Act, which became law in August.
In 2021, China will account for just over a third of Tesla’s total sales.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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