Tesla’s locally-built Model 3, designed for electric-powered performance went from 279,900 yuan to 265,900 yuan while the price of a Model Y SUV was cut down from 316,900 yuan to 288,900 yuan
Tesla slashes down the price for its Model 3 and Model Y in China amid price war warnings from analysts. Tesla’s cutting down of prices turnaround the trends of price increases in the industry amidst a reduction in demand as analysts warn of a price war.
The price cuts were announced after Elon Musk, tesla’s owner stated that the recession was about to happen in China and Europe and the vehicle delivery target of Tesla would be missed. The locally-built Model 3, designed for electric-powered performance went from 279,900 yuan to 265,900 yuan while the price of a Model Y SUV was cut down from 316,900 yuan to 288,900 yuan. One of the reasons prices came down could be accounted for the competition the company faces from locally produces electronic vehicle companies like BYD Co. which had record sales along with companies like Xpeng Inc. and Nio Inc. which are expanding their lineup.
The price cuts on the listing posted by Tesla’s China website are the first by the company in China in 2022. The reduction in prices comes after Tesla began offering limited incentives to buyers who opted for the electronic vehicle giant’s insurance. Musk told analysts the previous week that the demand was increasing in the present quarter, and it remains strong and added that he expects Tesla to be ‘recession resilient’. However, the move by Tesla to bring significant reduction in the price has caused a growing competitive risk for electronic vehicle manufacturers across China according to China Merchants Bank International (CMBI) where industry-wide sales are projected to have a slow pace in the year 2023.
The data sales in China grew 2.5% in September which was less than the expected 3.3% rise and August’s 5.4% growth. Analysts warn of an ‘inventory glut’ in China where the automobile sales growth was much slower in the month of September along with the growth of electronic vehicle sales which rose at its slowest pace in the past five months.
The firm informs that it was adjusting prices in line with costs according to the reports Reuters. The capacity utilization at the Shanghai Gigafactory has improved along with stability in the supply chain regardless of hard hits in the Chinese economy due to zero-COVID restrictions which caused a reduction in costs. Tesla and many other Chinese companies have increased prices several times in the past year due to increased raw material costs. The US auto manufacturer has regularly adjusted prices in China which also includes reductions mirroring government subsidies. The price of Tesla in the US, the firm’s largest market has been climbing and was around $70,000 in the month of August, reports Reuters.
Tesla’s shares dipped in pre-market trade on Monday after the company cuts the price of its electronic vehicle models. Shares of Tesla slipped around 3% in New York. The upgradation in the Shanghai factory of Tesla caused a significant rise in the production capability. The factory’s weekly output capability increased to around 22,000 compared to 17,000 in June.
CMBI warns that the year 2023 would bring more competition to the electronic vehicle and would reduce their growth below 50%. The Bank also warned that it expected other automakers to cut the price of hybrid plug-in electric cars battery-electric similar to Tesla as it would increase the production capacity in the coming year.
This US auto giant is presently China’s third best-selling EV maker after SAIC-GM-Wuling ad BYD Motor. The company is the only foreign player in the top 15 published by the China Passenger Car Association.