Tesla Cuts Down Prices in China After Not Meeting Delivery Expectations

Tesla Factory in China

The red down-pointing triangle made the steepest price cuts on its Model 3 and Model Y cars sold in China after deliveries of its Shanghai-made cars plunged in December to cap a challenging year globally for the electric-vehicle maker, reports Tesla to WSJ Print Edition.

Tesla Stock and it’s Factory in Shanghai

Prices for Tesla’s two most popular electric car models—made at its Shanghai factory will decrease by at least 5.7% to more than 13%, the U.S. carmaker said on Chinese social media Friday. Including the latest discounts, Model Y prices now start at around $37,000. The Model 3 starts at roughly $32,700, more than 30% cheaper than a standard Model 3 selling on Tesla’s U.S. website.

The company didn’t give a reason for the adjustments and didn’t immediately respond to a request for comment.

Tesla’s move comes after it made several price cuts late last year and offered other short-term discounts to lure buyers. Those failed to juice Tesla’s performance with deliveries of China-made cars—which include sales in the country and exports—falling by almost half in December from November to 55,800, according to data released Thursday by the China Passenger Car Association, reports WSJ Print Edition.

The U.S. company delivered more than 710,000 China-made EVs in 2022, up 50% from a year earlier, accounting for more than half of its global total. But its share of the world’s biggest EV market has been ebbing in the face of greater Chinese competition. Chinese rival BYD Co., whose cars are generally cheaper, delivered around 911,000 fully electric vehicles last year, almost three times that of 2021.

Tesla Fall Shorts on Deliveries

Globally, Tesla delivered fewer vehicles in 2022 than it initially targeted, capping a year during which the stock suffered its worst annual performance as demand appeared to soften and Covid-related production disruptions persisted in China. Its share price fell more than 60%, with some investors complaining that Chief Executive Elon Musk diverted his attention from the car company to his newly acquired Twitter Inc.

According to its SEC filings, China accounted for 24% of Tesla’s global revenue for the first three quarters of 2022.

Last month, the company doubled down on discounts on the same two car models in the U.S., offering a $7,500 credit and 10,000 miles of free Supercharging on its two most popular models through the end of 2022.

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After several price hikes during the first half of 2022 globally, amid surging material costs, Tesla began reducing its electric vehicles’ price tags in China in October. In the latest price cuts, Tesla’s long-range version of the Model Y saw the most significant reduction, of more than $7,000.

BYD, meanwhile, which also saw soaring sales of its plug-in vehicles, announced last week that official prices would increase between $300 and almost $900 per vehicle starting this year, citing the end of state subsidies for EV buyers. The company’s deliveries in December dropped slightly compared with November but more than doubled from a year earlier.

Tesla stock price forecast 2025

Tesla stock’s future depends on its continued innovation and global market share. As Tesla continues to navigate its recent hurdles, it is predicted that the company stock will continue to appreciate.