American EV darling Tesla has reportedly cut the price of its Model Y in China by a further RMB14,000 (about $A3,000) and has also started offering an RMB8,000 insurance subsidy for the Model 3 entry-level version.
According to CnEVPost, which provides invaluable coverage of Chinese-language electric vehicle announcements, Tesla has cut the price of its Model Y Long Range and the Model Y Performance by RMB14,000, which converts to around $A3,000.
This means that the starting price for the Model Y Long Range has dropped to RMB299,900 (around $A63,700) from RMB313,900 (around $A66,700), and the Model Y Performance’s starting price has dropped to RMB349,900 (around $A74,300) from RMB363,900 (around $A77,300).
The starting price for Tesla’s entry-level rear-wheel-drive Model Y in China remains unchanged at RMB263,900 (around $A56,000).
At the same time, Tesla has also begun offering a limited-time insurance subsidy of RMB8,000 (around $A1,700) for customers buying the entry-level Model 3.
All relevant Tesla models are made locally in China at the company’s Shanghai facility, meaning that expected delivery times for customers looking to take advantage of these reduced prices can still expect to wait between 1 to 4 weeks.
The moves, however, are significant for other reasons. China is the world’s biggest car market, and the world’s biggest EV market, with EV sales reaching 25 per cent and some of its EV makers emerging as the strongest manufacturers in the world.
The European and Japanese manufacturers that used to dominate the China market now find their share and influence vastly reduced. Even global car leader Toyota admitted recently that its future in China was threatened by the shift to electric vehicles, a trend that it has largely ignored as it focuses on hybrids and hydrogen cars.
Tesla is in a position to cut prices because it is reducing costs at the manufacturing level, including through its “giga-press” facilities, and is ready to cut into its otherwise healthy margins to maintain its big lead over rival car makers, and because it has the option of building revenue and profits from other streams, including apps and charging and EV credits.
The market will be watching carefully to see if these latest price cuts are replicated in other markets, including the US, Europe and Australia.
Its impact was already felt on the stock markets, where Bloomberg reports that Tesla’s stock fell 2.9 per cent, and other EV makers such as Rivian and Lucid also declined. Tesla’s main rival, China’s BYD, slumped more than six per cent in the Hong Kong market, Bloomberg reported as analysts and investors dialled down the margin expectations.
Joshua S. Hill is a Melbourne-based journalist who has been writing about climate change, clean technology, and electric vehicles for over 15 years. He has been reporting on electric vehicles and clean technologies for Renew Economy and The Driven since 2012. His preferred mode of transport is his feet.