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Tesla Slashes Prices in China After Deliveries Slump -- WSJ

The Wall Street Journal · 01/06/2023 01:47

By Selina Cheng

HONG KONG -- Tesla Inc. made the steepest price cuts so far 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.

Prices for Tesla's two most popular electric car models -- made at its Shanghai gigafactory -- will be reduced by at least 5.7% to more than 13%, the U.S. car maker said on Chinese social media Friday. Including the latest discounts, Model Y prices now start at the equivalent of around $37,000. The Model 3 starts at roughly $32,700, more than 30% cheaper than the price of 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.

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.

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.

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

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.

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 biggest reduction, of more than $7,000.

BYD, meanwhile, which also saw soaring sales of its plug-in vehicles, announced last week that official prices will 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.

Write to Selina Cheng at selina.cheng@wsj.com

(END) Dow Jones Newswires

January 06, 2023 01:47 ET (06:47 GMT)

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