Tesla cuts prices in China, other Asian markets as sales falter

SHANGHAI, Jan 6 (Reuters) – Tesla ( TSLA.O ) cut the price of electric cars in China for the second time in less than three months on Friday, fueling expectations for higher prices for cars that used batteries in the world’s largest automotive market. where needs are weak.

Tesla also cut prices on its Model Y and Model 3 electric cars in Japan, South Korea and Australia.

The combination of price cuts is part of an effort to help generate demand for Tesla’s production at its factory in Shanghai, the company’s single largest manufacturing facility, according to a people with direct knowledge of the plan.

This is the first major move by the electric car maker since Tesla appointed its chairman for China and Asia, Tom Zhu, who is based in Shanghai, to oversee international operations and deliveries.

The latest cuts in China, along with price cuts in October and incentives extended to Chinese customers three months ago, mean a 13% to 24% reduction in Tesla’s prices from in September in its second-largest market behind the United States, accordingly. according to Reuters.

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On Friday, Tesla lowered prices for all models of its Model 3 and Model Y vehicles in China by between 6% and 13.5%, according to Reuters calculations based on prices shown in on his website. The starting price for the Model 3, for example, was cut to 229,900 yuan ($33,427) from 265,900 yuan. Prices were cut in Japan on the same day.

Grace Tao, Tesla’s vice president in charge of overseas communications in China, posted on her Weibo social media account on Friday that Tesla’s price cuts in China reflected new engineering and “responding to the government’s call to increase the economy and encourage consumption.”

China’s Tesla car deliveries were the lowest in five months in December.

The cut comes days after Beijing ended a subsidy program that helped build the world’s largest EV market. Satisfying demand has forced Tesla and its competitors to shoulder the brunt of that decision.

China Merchants Bank International (CMBI), which warned in July that China’s EV sector was headed for a price crash, said Tesla’s price cuts confirmed the speculation, adding said that the American company may have to do better, especially if the competition with its Chinese counterparts increases. .

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The Model 3 and Y are the only models Tesla has released in China, although on Friday it announced prices for the Model S and Model X in the country.

“Tesla needs to reduce costs and expand its sales network in China’s downstream cities amid aging models,” said CMBI analyst Shi Ji.

“We expect new EV capacity in China to exceed new demand in 2023 and Tesla Shanghai’s capacity utilization could drop to around 80% this year. years when his Berlin house is enlarged.”

BYD (002594.SZ), which has a wide range of offerings including both plug-in and pure electric, saw its sales in China double in December while Tesla fell 42%, according to information from CMBI.

Tesla did not offer additional information when contacted by Reuters. A Tesla spokesperson told Reuters on Tao’s Weibo post.

Tesla’s discounts put the Model 3’s starting price on par with BYD’s best-selling Han EV sedan, which retails from 219,800 yuan. The Chinese EV company recently raised prices for its best-selling models after losing central government subsidies.

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Sales of BYD’s Han series, including compact models, more than doubled the Model 3 in China in 11 first month, according to the China Passenger Car Association.

Chinese prices of Model 3 and Model Y cars are 24% to 32% lower than in the United States, Tesla’s largest market, Reuters estimates showed, due to reasons including various materials and labor costs. .

Tesla also cut the prices of the Model 3 and Model Y cars by about 10% in Japan, the first time it has been done since 2021. The price for the Model 3 rear wheel drive version is 5.369 million yen ($40,091), down. from 5.964 million yen.

($1 = 6.8775 Chinese yuan)

($1 = 133.9200 yen)

Report by Zhang Yan and Brenda Goh; Edited by Kim Coghill and Muralikumar Anantharaman

Our Principles: The Thomson Reuters Trust Principles.


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