By
Bena Ilyas
April 23rd, 2024
Tesla has been facing growing challenges in China due to strict COVID-19 rules as well as growing competition from local electric carmakers like BYD.
The world’s largest electric carmaker Tesla Inc (NASDAQ: TSLA) has decided to cut the price of its cars in one of its most-competitive markets China. As per the latest development, Tesla has cut the price of its Model and Model Y vehicles.
Tesla Cars Price
The price of the Model 3 sedan in China has been reduced to 265,900 Chinese yuan ($36,615) from 279,900 yuan. Similarly, the price of Model Y sports utility vehicles has gone down to 288,900 yuan from the previous price of 316,900 yuan.
Tesla said that its price cuts come as the company was forced to increase its prices earlier this year in China and the US due to the rising raw material costs. Back in March, Tesla CEO Elon Musk had warned that his electric car firm had seen “significant recent inflation pressure in raw materials & logistics.”
Besides, Tesla’s price comes also comes as Elon Musk sees signs of recession in China. Elon Musk confessed this during his earnings call last week. “China is experiencing a recession of sorts” mostly in the property markets, he said.
During the quarter ending September 30, Tesla delivered a total of 343,000 vehicles falling short of analysts’ expectations. The company also fell short of revenue expectations during the third quarter. Tesla hasn’t given a breakdown of how many cars it sold in China last quarter.
Over the last month, Tesla stock has faced strong selling pressure correcting over 20% from the peak. Since the recent news of cutting car costs in China, TSLA stock corrected a further 3% in the premarket trading on Monday, slipping under the $210 level.
Tesla’s Rising Challenge in China
Tesla has established a huge Gigafactory in the Chinese city of Shanghai and the company completed upgrades earlier this year. However, China’s strict COVID-19 rules this year have affected Tesla’s supply chain massively.
On the other hand, Tesla is facing increasing competition from local Chinese rivals such as Warren Buffett-backed BYD as well as upstarts Nio and Xpeng.
for the first time, the Warren Buffett-backed Chinese electric vehicle (EV) manufacturer BYD surpassed Tesla in global sales of electric vehicles. For the first six months of the year, BYD sold a total of 640,000 vehicles while Tesla sold a total of 564,000 vehicles.