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Business News/ Auto News / Tesla announces second round of price cuts in China
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Tesla announces second round of price cuts in China

Tesla implements second round of price reductions in China, raising concerns of intensified price battle in automotive industry.

The company has slashed the prices of its Tesla Model S sedans and Tesla Model X sport utility vehicles in its inventory by up to 70,000 yuan (Bloomberg)Premium
The company has slashed the prices of its Tesla Model S sedans and Tesla Model X sport utility vehicles in its inventory by up to 70,000 yuan (Bloomberg)

Tesla Inc. has implemented its second series of price reductions in China this week, raising concerns of an intensified price battle within the automotive industry.

According to a report by Bloomberg, the company has slashed the prices of its Tesla Model S sedans and Tesla Model X sport utility vehicles in its inventory by up to 70,000 yuan ($9,600), bringing the costs down to 754,900 yuan and 836,000 yuan respectively. This adjustment was detailed in an announcement shared on its official WeChat account on Wednesday.

This move follows closely after Tesla's reduction of prices for the Long Range and Performance versions of the Model Y SUV by 14,000 yuan, and an extension of insurance subsidies for the base variant of the Model 3 sedan until the end of the upcoming month.

These price cuts have the potential to escalate an ongoing price war in the world's largest automobile market, possibly prompting premium automakers like BMW AG and Mercedes-Benz Group AG to consider similar measures. Additionally, accompanying incentives, such as complimentary fast-charging credits and trial periods for Tesla's enhanced Autopilot system through referrals, remain in effect.

Tesla's stock experienced a decline of 1.3% as premarket trading commenced on Wednesday. The company's shares have diminished by 20% since CEO Elon Musk cautioned about the likelihood of further price reductions during the carmaker's earnings call on July 19.

The automaker's shipments from its China-based plant plummeted by 31% in July, reaching the lowest level for the year. In a recent announcement, Tesla revealed that global production would decrease in the third quarter due to factory upgrades, although specific details were not disclosed. The company is anticipated to commence production of an updated version of the Model 3 sedan in the near future.

Musk emphasized last month that if interest rates persist in rising, Tesla will be compelled to continue lowering prices. The company's automotive gross profit margin has already been adversely affected by several rounds of discounts, dropping to a four-year low during the second quarter.

(With inputs from Bloomberg)

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Published: 16 Aug 2023, 04:54 PM IST
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