Tesla cuts China prices as world’s biggest EV market slows

TESLA cut the prices of both its locally-made models in China, potentially setting the stage for further discounting as overall growth in the world’s biggest electric vehicle (EV) market slows.

The starting price of the basic Model 3 sedan was cut 5.9 per cent to 245,900 yuan (S$46,897), according to the automaker’s official website. The Model Y sport utility vehicle starting price was lowered to 258,900 yuan from 266,400 yuan, marking a 2.8 per cent cut.

The moves may pile further pressure on Tesla’s rivals to lower prices, after the US automaker initially sparked a prolonged round of discounting in January 2023. Local manufacturers such as Xpeng and BYD and global automakers such as Volkswagen were all forced to slash prices to defend their market positions to 2023, with only a third of local carmakers eventually meeting their annual sales goals.

Meanwhile, China’s electrified car market is projected to slow for a second year in 2024 as the nation’s patchy economic recovery from the pandemic weighs on consumer sentiment. Shipments of battery-electric and plug-in hybrid vehicles to dealers are projected to increase 25 per cent to 11 million units this year, China Passenger Car Association said earlier this week. It compares to a 36 per cent growth in 2023 and a 96 per cent pace in 2022.

“The gap between Chinese automakers and Tesla has been unprecedentedly small,” Paul Gong, UBS Group analyst, said at an event earlier this year, noting the pace at which Chinese automakers have launched new models and their focus on advanced technologies. Tesla, which mainly relies on just the Model 3 and Model Y for sales, has increasingly been using price cuts to lure buyers. BLOOMBERG

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