Tesla cut prices in China for the second time in less than three months, fuelling forecasts of a wider price war amid weaker demand in the world’s largest autos market. The U.S. automaker also cut prices on its best-selling Model Y and Model 3 EVs in Japan, South Korea and Australia in an effort to help stoke demand for output from its Shanghai factory, its single largest production hub.
The shift is the first major move by Tesla since appointing its lead executive for China and Asia, Tom Zhu, to oversee global output and deliveries that have been at the heart of the company’s recent challenges after falling short of its 2022 delivery target. Tesla shares fell 2.5% in active trading Friday. The stock has lost 70% of its value in the last year.
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The latest cut in China, along with another in October and recent incentives for Chinese buyers, mean a 13% to 24% reduction in Tesla’s prices from September in its second-largest market after the United States, Reuters calculations showed.
Tesla slashed prices for all its Model 3 and Model Y cars in China by between 6% to 13.5%, according to Reuters calculations based on the website prices. The starting price for the Model 3 was cut to 229,900 yuan ($33,427), from 265,900 yuan.
Deliveries of Tesla’s China-made cars hit their lowest in five months in December. Tesla’s Shanghai plant, which was expanded last year, also exports vehicles to Europe. So far, there has been no sign of Tesla cutting prices in Europe, where sales jumped 93% in November year-on-year, according to sales data from research group JATO Dynamics, and the Model Y was the top-selling car for the second time in 2022.
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The price cuts came days after Beijing ended a subsidy programme, with softening demand forcing Tesla and rivals to absorb the brunt of the move. China Merchants Bank International (CMBI) said that Tesla may have to do more, especially as competition with Chinese rivals intensifies. After the price cut, Tesla’s Model 3 was the equivalent of about $1,000 more that BYD’s Seal, a model launched in July. The Model 3 is now the same price as BYD’s best-selling Han EV.
Some Tesla owners in China who took delivery in recent months and did not qualify for the reduced prices said on Friday that they planned protests at its showrooms in Shenzhen and Henan. The China prices of the Model 3 and Model Y cars are now 24% to 32% lower than those in the United States, Tesla’s largest market. In 2021, China accounted for just over a third of Tesla’s overall sales.
