SHANGHAI — Tesla discount in China for the second time in less than three months on Friday, boosting forecasts of a broader price war amid weaker demand in the world’s largest auto market.
The American car company also reduced the best selling price Model Y and 3 . sample electric car in JapanKorea and Australia According to a person with direct knowledge of the plan, it is part of an effort to help stimulate demand for output from the factory in Shanghai, its largest manufacturing hub.
Tesla shares fell 4.5% in premarket trading after Tesla’s first big move since appointing the company’s chief executive for China and Asia, Tom Zhu, to oversee production. global volume and delivery.
Automakers have long turned to incentives to control inventory, but until the end of last year Tesla was able to keep prices steady or even raise prices due to high orders.
But last month CEO Elon Musk said “fundamental changes in interest rates” have affected the affordability of all cars, new and used, and that Tesla may lower prices to maintain volume growth.
The latest cut in China, along with another cut in October and recent offers for Chinese buyers, means Tesla’s prices will fall between 13% and 24% compared to September. in the second largest market after the United States, Reuters calculate shows.
Tesla has slashed the prices of all Model 3 and Model Y models in China by 6% to 13.5%, according to Reuters calculations based on prices on the website. The starting price for the Model 3 has dropped to 229,900 yuan ($33,427), from 265,900 yuan.
Grace Tao, Tesla’s vice president of external communications in China, said on Weibo that the price cuts in China reflect technical innovation and respond to calls to encourage economic development and consumer spending. used by Beijing.
Tesla’s deliveries of Chinese-made cars hit a five-month low in December. Tesla’s Shanghai factory, which was expanded last year, also exports vehicles to Europe.
So far, there is no sign that Tesla will cut prices in Europe, according to sales data from research group JATO Dynamics, sales increased 93% in November year-over-year and the Model Y for the second time. become the best-selling car model by 2022.
Tesla also sees Europe’s battery market share tram (BEV) spiked to 18.9% in November, from 12.3% in the same month a year earlier.
SUPPORT ENDED
The cuts come days after Beijing ended its subsidy program, with weakening demand forcing Tesla and its rivals to bear the brunt of the move.
China Merchants Bank International (CMBI) thinks that Tesla may have to do more, especially as competition with Chinese rivals grows fiercer.
“Tesla needs to continue to lower prices and expand its sales network in low-end Chinese cities amid aging models,” said CMBI analyst Shi Ji.
“We expect new electric vehicle production capacity in China to exceed new demand by 2023.”
But Sun Shaojun, a popular auto blogger in China, said on Weibo that Tesla’s price cuts are so big that other automakers, including bigger rival BYD, will have to respond.
BYD recently raised prices on its best-selling models after government subsidies ended.
After the discount, Model 3 of Tesla That equates to about $1,000 more than BYD’s Seal, a model launched in July. The Model 3 is currently priced the same as BYD’s best-selling Han EV.
BYD declined to comment on competitors’ pricing, but said it would adjust itself to changes in market demand.
BYD, which sells both electric and electric vehicles, saw retail sales in China double in December, while Tesla’s fell 42%, according to data from CMBI.
PROPOSED PERFORMANCE
Several Tesla owners in China who have received goods in recent months and are not eligible for the discount said on Friday that they were planning to demonstrate at its showrooms in Shenzhen and Henan, screenshots of social media chats seen by Reuters show.
Tesla had no further comment. A Tesla spokesperson referred Reuters to Tao’s Weibo post.
According to calculations by Reuters, Model 3 and Model Y prices in China are currently between 24% and 32% lower than in the US, Tesla’s largest market, reflecting a range of factors including material and labor costs. motion.
Tesla also slashed the price of the Model 3 and Model Y by about 10% each in Japan, the first time it has done so since 2021.
In the United States, Model Y and Model 3 are eligible for a clean car tax credit of up to $7,500 as of this month under the Biden administration’s Inflation Reduction Act, which became law in August.
By 2021, China will account for just over a third of Tesla’s total sales.
