Tesla cuts prices in China as costs Fall - PingWest

Tesla cuts prices in China as costs Fall

Tesla cuts prices in China as costs Fall

19 hours ago

Tesla slashed the price of its Model 3 and Model Y vehicles in China, the company announced on Monday.

The starting price for the Model 3 sedan was reduced to 265,900 yuan ($36610.22 ) from 279,900 yuan, and the starting price for the Model Y sports utility vehicle was reduced to 288,900 yuan from 316,900 yuan, according to Tesla's announcement released on its Weibo account.

Tesla told Reuters it was adjusting prices in line with costs. It said that capacity utilization at its Shanghai Gigafactory has improved, while the supply chain remains stable despite the impact on the economy of China's zero-COVID restrictions, leading to lower costs.

In September, the China Passenger Car Association (CPCA) reported Tesla delivered 83,135 China-made electric vehicles, a monthly record for the company since production began in December 2019.

The US automaker’s move stands in stark contrast to its Chinese rivals, including BYD, NIO and Xpeng Motors, which have raised prices this year due to rising raw material costs.

Tesla is now China's third best-selling EV maker after BYD and SAIC-GM-Wuling, and is the only foreign player in the top 15 list published by the CPCA.

In the latest earnings call, Elon Musk, CEO of the EV titan, warned that "China is experiencing a recession of sorts” mostly in the property markets. 

China's economy rebounded faster than expected in the third quarter, with GDP expanding 3.9% from a year earlier, official data showed on Monday. However, economic headwinds, including weakening domestic demand and slowing export growth and others, suggest a challenging recovery.

In a note to clients, Bank of America analyst Ming Hsun said Tesla had to make the price cuts because of slowing EV growth in China and increased capacity coming from  Shanghai Gigafactory, leading to shorter wait times for orders.