Tesla reduces cost in Chinese market once more

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【Summary】Tesla has once again lowered its prices in China, causing concerns about a renewed price war in the auto industry. The price cuts apply to the Model Y SUV and extend an insurance subsidy for the Model 3. Other automakers like Geely and Zhejiang Leapmotor have also reduced prices recently. Tesla's move is an attempt to maintain sales volume after a decline in July, and to attract Chinese buyers without new models.

FutureCar Staff Aug 14, 2023 12:40 AM PT

Tesla reduces cost in Chinese market once more

Tesla has announced a new round of price cuts in China, causing concern among investors and leading to a decline in auto stocks. This move is expected to reignite a price war that had previously shown signs of slowing down.

In its latest announcement, Tesla reduced the prices of the top-end Long-Range and Performance versions of the Model Y sport utility vehicle by 14,000 yuan ($1,900) to 299,900 yuan and 349,900 yuan respectively. Additionally, the company extended an 8,000 yuan insurance subsidy on newly purchased Model 3 rear-wheel drive vehicles until the end of next month.

This price reduction follows similar moves by other automakers in China. Geely Automobile Holdings' Zeekr brand recently lowered prices by as much as 37,000 yuan, while Zhejiang Leapmotor Technologies cut prices by up to 20,000 yuan earlier this month. Tesla initially triggered the price war with its own round of cuts last year, followed by further discounts in January, making its locally made cars up to 14 percent cheaper than the previous year and significantly less expensive compared to the US and Europe.

Analysts predict that price competition will continue to be a prominent feature in China's auto market. Tesla's aim with these price cuts is to maintain sales volume, especially after July's sales figures showed a decline in order intake without any new models to attract Chinese buyers.

In July, Tesla's deliveries in China dropped by 31 percent, reaching the lowest level this year. This decline coincides with the company's plans to introduce its revamped Model 3 "Highland" sedan from its Shanghai factory in the near future.

Although clean car sales in China decreased from June to July, major players such as BYD, Li Auto, and Nio reported new sales records, indicating a shift in consumer preferences.