Tesla cuts Model Y prices in China as rivals’ EV sales gather pace

Tesla has cut prices of its Shanghai-made Model Y vehicles by 4 per cent, its first reduction in seven months, as the US carmaker seeks to keep its Chinese electric-vehicle rivals at bay.

The price of the sport-utility vehicle’s Long Range model was dropped to 299,900 yuan (US$41,320), from 313,900 yuan, while the Performance version was cut to 349,900 yuan, from 363,900 yuan, the company said on Monday. The basic edition of Tesla’s bestselling model in China was unchanged at 263,900 yuan.

The prices of the Long Range and Performance editions of Model Y are now at their lowest in China since Tesla began assembling the SUV at the Gigafactory at the start of 2021.

“Tesla remains the leader in the premium electric vehicle (EV) segment in China, but it is facing heightened competition from local rivals,” said Eric Han, a senior -manager at Suolei, an advisory firm in Shanghai. “It wants to make its bestselling Model Y more attractive to Chinese buyers to retain its market share.”

Chinese EV start-ups Li Auto, Nio and Xpeng, which are viewed as China’s best response to Tesla, reported lofty monthly sales in July, buoyed by the release of pent-up demand in the world’s largest market for EVs.

Beijing-based Li Auto handed 34,134 vehicles to Chinese customers in July, beating its previous record of 32,575 a month ago, while Shanghai-headquartered Nio delivered 20,462 cars, surpassing its record of 15,815 last December.

Guangzhou-based Xpeng posted sales of 11,008 units in July, a month-on-month jump of 27.7 per cent.

Tesla’s Shanghai factory delivered 325,528 units of Model 3 and Model Y between January and July this year, up 58 per cent from the same period in 2022. The deliveries accounted for 8.7 per cent of the total EV sales of 3.73 million units in mainland China during the same period.

In 2022, Tesla sold 439,770 vehicles in China, representing 7.8 per cent of the national total of 5.67 million units.

China’s July vehicle exports soar 63 per cent, widening lead over Japan

The EV maker, led by US billionaire Elon Musk, adjusts prices of its locally built vehicles regularly based on -production costs, Grace Tao, Tesla’s head of communications and government affairs in China, said on the microblogging site Weibo in January.

Tesla also said that buyers of the entry-level Model 3 cars can receive 4,000 yuan in subsidies from Monday if they buy car insurance from its partners.

“The new round of price cuts by Tesla comes after some of its Chinese rivals offered discounts as they vie for a bigger share of the market,” said Zhao Zhen, a sales director with Shanghai-based dealer Wan Zhuo Auto. “But a bruising industry price war is unlikely to occur because the Chinese EV market appears to be strong amid rising demand.”

Chinese carmakers to ‘upend’ the global automotive industry, says BYD founder

This month a raft of EV makers including Zeekr and Leapmotor have slashed prices of some models by as much as 10 per cent to bolster sales.

Tesla fired the first salvo in China’s price war last October. It then -followed it up with another round of heavy discounts in January, prompting dozens of rival EV makers and conventional manufacturers to slash prices to retain their market shares.

But the steep discounts failed to drive up sales because budget-conscious consumers held back, hoping for even deeper price cuts.

Some of them decided to enter the market in mid-May as they felt the price war was over, Citic Securities said at the time.