Tesla Slashes Prices in China, Prompting Stock Drop
Beijing, China – In a strategic move to stay competitive in the Chinese market, Tesla has once again reduced prices, causing its shares to plummet by 3% in Monday morning trading, according to reports.
Late on Sunday evening, the electric vehicle manufacturer announced the price cuts in a Weibo post. The company has discounted two Chinese versions of its popular Model Y crossover by 14,000 yuan, approximately $2,000. The original prices for the models were set at 299,000 and 349,000 yuan, respectively.
Additionally, Tesla revealed that its Model 3 will benefit from a “limited-time insurance subsidy” of 8,000 yuan, which roughly totals $1,100 U.S dollars. This insurance subsidy will be available until September 2023, as stated in Tesla’s online announcement.
These price reductions come as a response to the tough competition Tesla is facing from domestic automakers including BYD, Nio, and Xpeng. The intense rivalry has led to a detrimental effect on Tesla’s margins, particularly in the second quarter of 2023. Despite ramping up production at its Shanghai Gigafactory, Tesla has been losing ground to local competitors.
To combat this, Tesla has resorted to multiple price cuts throughout 2022 and 2023. The aim of these reductions is two-fold: to clear out existing inventory and to boost deliveries, which serves as the closest approximation to traditional automotive sales for the company.
Investors initially responded unfavorably to the news, causing Tesla’s shares to drop by 3% in morning trading on Monday. The stock market’s reaction highlights the significance of the Chinese market to Tesla’s overall performance and growth prospects.
CNBC’s Hakyung Kim contributed to this report, providing valuable insights into Tesla’s ongoing challenges and strategic decisions in the Chinese automotive market.