SHANGHAI, Jan 6 (Reuters) – Tesla (TSLA.O) cut prices in China for the second time in less than three months on Friday, fueling forecasts of a broader price war amid weaker market demand. world’s largest automobile
The US automaker also slashed prices on its best-selling Model Y and Model 3 electric vehicles in Japan, South Korea and Australia, in what a person with direct knowledge of the plan said was part of an effort to help stoke production demand from your Shanghai. factory, its largest production center.
Tesla shares fell 4.5% in premarket trading after Tesla’s first major move since it appointed its China and Asia chief executive Tom Zhu to oversee global production and deliveries.
Automakers have long relied on incentives to control inventory, but until late last year, Tesla had been able to hold prices steady or even raise them due to strong orders.
But last month, Chief Executive Officer Elon Musk said “sweeping interest rate changes” had affected the affordability of all cars, new and used, and that Tesla may lower prices to support volume growth. .
The latest cut in China, along with another in October and recent incentives for Chinese buyers, mean a 13% to 24% reduction in Tesla’s prices from September in its second-biggest market after the United States, they showed. Reuters calculations.
Tesla cut prices for all of its Model 3 and Model Y cars in China between 6% and 13.5%, according to Reuters calculations based on website prices. The Model 3’s starting price has been reduced to 229,900 yuan ($33,427), from 265,900 yuan.
Grace Tao, Tesla’s vice president in charge of external communications in China, said on Weibo that the price cuts in China reflected engineering innovation and responded to Beijing’s call to encourage economic development and consumption.
Deliveries of Chinese-made Tesla cars hit their lowest level in five months in December. Tesla’s Shanghai plant, which was expanded last year, also exports vehicles to Europe.
So far, there have been no signs of Tesla cutting prices in Europe, where according to sales data from research group JATO Dynamics, sales were up 93% in November year-over-year and the Model Y was the top-selling car for second time. in 2022.
Tesla also saw its share of the European battery electric vehicle (BEV) market increase to 18.9% in November, from 12.3% in the same month a year earlier.
END OF GRANTS
The cuts came days after Beijing ended a subsidy program, and declining demand forced Tesla and its rivals to absorb the lion’s share of the measure.
China Merchants Bank International (CMBI) said Tesla may need to do more, especially as competition with Chinese rivals intensifies.
“Tesla needs to further cut prices and expand its sales network in China’s lower-tier cities amid outdated models,” said Shi Ji, an analyst at CMBI.
“We expect new electric vehicle production capacity in China to exceed new demand by 2023.”
But Sun Shaojun, a popular auto blogger from China, said on Weibo that Tesla’s price cuts were so big that other automakers, including bigger rival BYD (002594.SZ), would have to respond.
BYD recently increased the prices of its best-selling models after government subsidies ended.
After the price cut, Tesla’s Model 3 was worth about $1,000 more than BYD’s Seal, a model launched in July. The Model 3 is now priced the same as BYD’s best-selling Han EV.
BYD declined to comment on competitors’ prices, but said it would adjust its prices based on changes in market demand.
BYD, which sells both plug-in and pure electric vehicles, saw its retail sales in China double in December, while Tesla’s fell 42%, according to CMBI data.
PLANNED PROTESTS
Some Tesla owners in China who received deliveries in recent months and did not qualify for the reduced prices said on Friday they were planning protests at their showrooms in Shenzhen and Henan, screenshots of social media chats seen by Reuters showed.
Tesla had no additional comment. A Tesla spokesperson referred Reuters to Tao’s Weibo post.
Prices in China for Model 3 and Model Y cars are now 24% to 32% lower than in the United States, Tesla’s biggest market, Reuters calculations showed, reflecting a variety of trends. factors, including material and labor costs.
Tesla also cut prices for the Model 3 and Model Y by about 10% each in Japan, the first time it had done so since 2021.
In the United States, Model Y and Model 3 are eligible for up to $7,500 in clean vehicle tax credits starting this month under the Biden administration’s Reduced Inflation Act, signed into law in August.
In 2021, China accounted for just over a third of Tesla’s total sales.
($1 = 6.8775 Chinese yuan)
($1 = 133.9200 yen)
Reporting by Zhang Yan and Brenda Goh; Additional reporting by Nick Carey; Graphics by Vincent Flasseur; Edited by Kim Coghill, Muralikumar Anantharaman, and Alexander Smith
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