SHANGHAI, Jan 6 (Reuters) – Tesla (TSLA.O) cut car prices in China on Friday for the second time in less than three months, sparking a price war amid slumping demand in the world’s biggest auto market Got promoted.
The latest cuts, along with cuts in October as well as various incentives for Chinese buyers amounting to up to 10,000 yuan over the past three months, amount to a 13% to 24% reduction in Tesla prices since September. Reuters calculations.
The US electric vehicle (EV) maker on Friday slashed prices of all versions of its Model 3 and Model Y cars in China by 6% to 13.5%, according to Reuters calculations based on prices shown on its website. For example, the starting price of the Model 3 was reduced from 265,900 yuan to 229,900 yuan ($33,427).
“Tesla’s price adjustments are supported by myriad engineering innovations,” Grace Tao, Tesla’s vice president in charge of external communications in China, posted on her Weibo social media account on Friday. ,[They] Respond to the government’s call to spur economic growth and encourage consumption.”
The move comes after Tesla’s December deliveries of China-made cars fell to the lowest in five months, and just days after Beijing ended a subsidy program that helped create the world’s biggest EV market. Soft demand has forced Tesla and its rivals to bear the brunt of that decision.
China Merchants Bank International (CMBI), which warned in July that China’s EV sector was headed for a price war, said the slashing of Tesla prices confirmed the prediction, adding that the US firm needs more It may have to, especially as competition with its Chinese rivals has intensified.
The Model 3 and Y are Tesla’s only models in China, although on Friday it announced prices for the Model S and Model X in China.
“Tesla needs to further cut prices and expand its sales network among older models in China’s lower-tier cities,” said CMBI analyst Shi Jie.
“We expect new EV production capacity in China to exceed new demand in 2023 and Tesla Shanghai’s capacity utilization could reach around 80% this year or even lower if its Berlin plant ramps up.”
BYD (002594.SZ), which has a much larger variety of vehicles including both plug-in and pure electric vehicles, saw its retail sales double in China in December, according to CMBI data, while Tesla’s sales fell 42%.
Tesla offered no additional comment when contacted by Reuters, and a spokesman only referred to Tao’s Weibo post.
The carmaker’s discounts have brought the Model 3’s starting price to the same level as BYD’s best-selling Han EV sedan, which sells from 219,800 yuan. The Chinese EV maker recently increased the prices of its best-selling models after losing central government subsidies.
According to the China Passenger Car Association, sales of BYD’s Han series, including plug-in hybrid versions, were more than double those of the Model 3 in China in the first 11 months.
China’s prices for Model 3 and Model Y cars are now 24% to 32% lower than those in the United States, Tesla’s biggest market, Reuters calculations showed, for reasons including a variety of material and labor costs.
($1 = 6.8775 Chinese Yuan)
Reporting by Zhang Yan and Brenda Goh; Editing by Kim Coghill and Muralikumar Anantharaman
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