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'Tesla Turns Positive After Price Drop As Crowds Flock To Stores, But They Are Actually Protesters' - Electrek

Benzinga · 01/06/2023 13:16

https://electrek.co/2023/01/06/tesla-tsla-turns-positive-price-drop-as-crowds-flock-stores-but-protesters/

After starting the day deep in the red due to price cut being announced in China, Tesla (TSLA) turned positive after crowds were reportedly flocking to stores to buy cars.

The only problem is that they were not there to buy but to protest.

Earlier today, we reported on Tesla slashing prices in China, which raised demand concerns for the automaker in the important EV market.

The price drops on some Model 3 and Model Y trims were significant and while it will have a negative effect on the company’s gross margin, we expected that it would be successful in increasing sales.

The company’s stock (TSLA) was significantly down in pre-market trading following the news.

Now Tesla investors and fans are sharing stories that buyers are crowding Tesla’s stores in China to buy following the price drops:

Tesla’s stock has since turned positive and recovered from the drop that followed the price adjustment in China.

However, Electrek learned that most crowds going to Tesla stores are there actually there to protest the price drops.

Several groups of recent Tesla buyers announced on Weibo that they were organizing protests at Tesla stores across the country. The protesters are sharing videos on China’s Weibo and some of those videos are being shared in the US as customers rushing to buy following the price drop.

Tesla customers in China have a history of protesting following price drops. They first did back in 2019 following a rare price drop from Tesla and then again in October 2022 following a price drop.

The company famously has a policy of having consistent pricing with no discount, but it has moved away from that strategy lately.

While reports of a price reduction were coming from China at the end of 2022, Tesla officials strongly denied them, but the company specifically mentioned that no further price increase would come in 2022.

Now a few days after the end of the year, Tesla significantly dropped the price and many customers who bought at the end of 2022 are frustrated.

Grace Tao, Vice-President of Tesla China, posted on Weibo today claiming that the price drop is actually linked to “engineering innovations” (translated from Chinese):

Behind Tesla’s price adjustments, there are countless engineering innovations, which are essentially unique and excellent laws of cost control: including not limited to vehicle integration design, production line design, supply chain management, and even millisecond-level optimization of robotic arm coordination Route… Start from “first principles” and insist on cost pricing. Respond to the country’s call with practical actions to promote economic development and release consumption potential. 2023 Let’s welcome a better life together.

However, many people are not buying this explanation. Historically, Tesla has increased gross margins with cost improvements and only adjusted pricing when needed to create demand.