Tesla lowers costs
As demand looks to be waning in the biggest auto market in the world, Tesla has reduced the starting costs for its Model 3 and Model Y vehicles by as much as 9% in China. This is reversing a pattern of price hikes across the sector.
The price reductions, which were announced in listings on the electric car manufacturer’s China website on Monday, are the first by Tesla in the country in 2022 and follow the start of its last month’s limited incentive programme for customers who choose to purchase its insurance.
Early trading saw the company’s shares in Austin, Texas, down 4.9 percent to $203.90.
The price reductions also come in response to Tesla CEO Elon Musk’s last week statement that “a recession of sorts” was underway in China and Europe, as well as Tesla’s announcement that it would miss its vehicle delivery target for this year.
Last week, Musk told analysts that the current quarter’s demand was robust and that he anticipated Tesla to be “recession-resistant.”
With industry-wide sales expected to slow through 2023, China Merchants Bank International (CMBI) claimed that Tesla’s pricing decreases highlighted the growing competition risk for Chinese electric carmakers.
Shi Ji, an analyst with CMBI, stated that “the price decreases emphasise the potential pricing war that we have been emphasising since August.”
While the electric car manufacturer hiked pricing in the United States, its main market, over the last year due to rising raw material costs, Tesla dropped prices in China last year in an effort to be more competitive there.
