Tesla Again Cuts EV Prices in China

Weeks after pledging to help stop the ongoing discount war among electric vehicle manufacturers in China, Tesla has again slashed EV prices in the country. The American electric vehicle maker cut prices for the Model Y by $1,900 (14,000 yuan), bringing the cost of the Performance and Long Range versions down to $41,309 (299,900 yuan) and $48,196 (349,000 yuan) respectively.

Tesla announced on its official Weibo account that it would extend its $1,102 (8,000 yuan) insurance subsidy for the base Model Y model to the end of August. Customers living close to Tesla manufacturing centers can also expect to enjoy reduced luxury EV prices as Tesla clears out inventory in an attempt to increase delivery numbers and meet investor benchmarks.

The Austin, Texas-based electric vehicle company began cutting vehicle prices in the Chinese market around a year ago, which led to a discount war that saw several other local EV makers reduce their prices to remain competitive. Tesla has reduced prices several more times since then, and by January, Tesla vehicles were up to 50% cheaper on the Chinese market compared to America.

In April, Tesla cut vehicle prices for the sixth consecutive time in 2023 alone to mitigate the loss of EV tax credits and increase demand for its electric offerings. The China Association of Automobile Manufacturers has been unimpressed with Tesla’s recent price cuts, stating that Tesla was artificially impacting China’s electric vehicle market and issuing the company several warnings.

Tesla eventually agreed to join a pledge with other major carmakers in the country that would see them limit price discounting to avoid affecting the EV market. Tesla CEO Elon Musk went back on the promise just a week later and informed investors that the company would reduce vehicle prices even further due to uncertain market conditions in China and the global economy.

The company reigned supreme over the Chinese EV market, capturing a large swathe of the market and selling the most popular electric vehicle in the country before competition from local automakers such as Xpeng, Nio and BYD began eating into its profits. Despite ramping up production in its Shanghai gigafactory, Tesla is slowly conceding market to domestic automakers.

Chinese automakers such as BYD have consistently encroached on Tesla’s market. In 2022, BYD surpassed Tesla in electric vehicle sales with slightly more than 1.8 million mostly local vehicle deliveries to become the largest seller of alternative energy vehicles on the globe.

It remains to be seen how other China-based EV makers such as Kandi Technologies Group Inc. (NASDAQ: KNDI) will react to this latest price reduction by Tesla.

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