China Merchants Bank International, which warned in July that China’s EV sector was headed for a price war, said Tesla’s recent price cuts confirm its predictions, especially as competition from Chinese rivals intensifies. U.S. automakers may have to do more, he added.
“Tesla will need to further cut prices and expand its distribution network in China’s low-rise cities, where models are aging,” said CMBI analyst Shi Ji.
“By 2023, China’s new EV capacity will outpace new demand, and Tesla Shanghai’s capacity utilization could drop to about 80% or less this year if the Berlin factory is boosted. I have.”
Tesla’s Shanghai factory, which was expanded last year, also exports cars to Europe. There was no immediate sign of price cuts by his EV maker in those markets.
But Sun Shaojun, a popular Chinese auto blogger, said on Weibo that Tesla’s price cuts were so great that other automakers, including Tesla’s biggest rival BYD, had to respond in the market. Said he wouldn’t get it.
BYD recently increased prices on its best-selling models after a government subsidy program expired at the end of the year.
After Friday’s price cut, Tesla’s Model 3 was about $1,000 more expensive than BYD’s Seal, which launched in July. The Model 3 is currently priced the same as BYD’s best-selling Han EV.
BYD declined to comment on competitors’ pricing, but said it adjusts its own pricing in response to changes in market demand.
BYD, which sells both plug-in and pure electric vehicles, doubled its retail sales in China in December, while Tesla’s fell 42%, according to CMBI data.
Some Chinese Tesla owners who received deliveries in recent months and weren’t eligible for price cuts protested Friday at the automaker’s showrooms in Shenzhen and Henan, according to social media chat screenshots obtained by Reuters. He said he planned to act.
Tesla did not provide additional comment when contacted by Reuters. A Tesla spokesperson told Reuters about Tao’s Weibo post.
Prices for the Model 3 and Model Y in China are 24% to 32% lower than in the United States, Tesla’s largest market, according to Reuters calculations, reflecting a variety of factors including material and labor costs. It is
Tesla has also slashed the prices of its Model 3 and Model Y cars by about 10% each in Japan. This is his first since 2021.
In the U.S., the Model Y and Model 3 are eligible for the clean vehicle tax credit of up to $7,500 as of this month under the terms of the Biden administration’s Inflation Reduction Act, which was enacted in August.
In 2021, China will account for just over a third of Tesla’s total revenue.