Tesla (Tesla, US: TSLA) cut prices twice in less than 3 months in China. The domestic Model 3 and Model Y prices dropped by more than 13% and 10% respectively. The starting price of the former is only 230,000 yuan (RMB ．The same below), the cheapest ever. The price cut this time comes at a time when Tesla’s delivery volume in China hit a five-month low. Market analysis pointed out that Tesla hopes to use the price cut to grab market share in order to deal with the overcapacity of the Shanghai factory.
The most flat price reduction in Japan, South Korea and Australia
Tesla, which lowered the prices of the rear-wheel-drive versions of Model 3 and Model Y in mainland China by regarding 50% and 9% respectively in late October last year, announced another price cut on Friday (6th). The starting price of the Model 3 rear-wheel drive version dropped from the original 265,900 yuan to 229,900 yuan, a decrease of 13.5%; the starting price of the Model Y rear-wheel drive version also dropped from 288,900 yuan to 259,900 yuan, a 10% decrease.
Tesla also announced that the new prices of Model S and Model X start at RMB 789,900 and RMB 879,900, respectively.
This time not only lowered the price in China, Tesla also announced that it will lower the price of Model 3 and Model Y in Japan, South Korea and Australia. After two price reductions, the starting prices of the Model 3 and Model Y rear-wheel drive versions in China also saw a cumulative reduction of regarding 18%. In fact, in addition to the official price reduction, Tesla China also provided buyers with time-limited insurance subsidies and time-limited delivery incentives from time to time in the fourth quarter of last year, and indirectly gave short-term discounts to exchange prices for sales.
Looking forward to digesting the excess capacity of the Shanghai plant
Tesla’s price cut once more in a short period of time is said to be aimed at stimulating sales and market share in order to digest the excess capacity of Tesla’s Shanghai Gigafactory. According to the December new energy passenger car data released by the China Passenger Federation, Tesla delivered only 55,796 vehicles last month, the lowest in five months, with year-on-year and month-to-month drops of 21% and 44.4% respectively. The company’s Shanghai plant produced more than 710,900 units last year, accounting for 54% of its global sales last year. However, Tesla’s global delivery volume in 2022 will only increase by 40% year-on-year, which is lower than the original annual growth target of 50%.
In addition, according to foreign sources citing sources, Tesla’s Shanghai plant had temporarily suspended production from the end of last year to the beginning of the year, and the plant will be shut down once more from January 20 to 31. The arrangement was alleged to be related to production line upgrades and slowing consumer demand, but Tesla responded earlier that the news was not completely accurate, emphasizing that the plant is carrying out annual production line maintenance work as planned, and production lines such as charging piles have not stopped production .
For Chinese automakers, Tesla’s price reduction is negative news for the already highly competitive new energy vehicle market in the mainland. China’s 13-year subsidy for new energy vehicles expired at the end of last year, adding to the challenges facing the industry.
Wei Xiaoli and other electric vehicle stocks fell across the board
The news of Tesla’s price cut this time triggered a general decline in mainland electric car stocks on Friday. Xpeng (09868), Ideal (02015), Leap (09863) and Weilai (09866) fell by regarding 4% to 7% , BYD (01211) also fell regarding 2.6%.
Major mainland automakers have different reactions to the subsidy withdrawal. BYD and SAIC Volkswagen have chosen to increase prices and pass on part of the increased costs to customers. The guide price remains unchanged. Tesla announced a price cut when some Chinese rivals raised prices.
In addition, the China Association of Automobile Manufacturers estimates that the sales of new energy vehicles in the mainland last year increased by 90% year-on-year to 6.7 million. Overall car sales for the year rose 1.7% year-on-year to 26.757 million units.
