Tesla Amplifies Incentives in China to Stimulate Electric Car Demand Amid Intense Price War
March 01 2024 - 6:42AM
IH Market News
Tesla Inc. (NASDAQ:TSLA) is escalating its efforts to invigorate
demand for its electric vehicles in China, introducing significant
incentives to counteract the fierce competition, particularly from
BYD, in the paramount EV market globally.
In a strategic move disclosed through its Weibo account on
Friday, the American electric vehicle giant announced that
purchasers of its available stock of the rear-wheel drive variants
of Model 3 and Model Y throughout this month would be eligible for
substantial incentives and discounts amounting to thousands of
dollars.
The incentives include insurance subsidies up to 8,000 yuan
(approximately US$1,113), effectively reducing the prices of the
Model 3 and Model Y to CNY245,900 and CNY250,900 respectively,
translating to a price reduction of over 3% for each model.
Additionally, Tesla is offering a CNY10,000 discount on selected
body paint colors, further sweetening the deal for prospective
buyers.
This latest initiative by Tesla is a response to the
intensifying competition and widespread price reductions within
China’s automotive industry, as manufacturers vie for a larger
market share amidst decelerating vehicle sales and surplus
production capacity in the world’s second-largest economy.
Tesla’s move follows closely on the heels of recent price
adjustments by BYD, the leading electric vehicle manufacturer
backed by Warren Buffet, which recently surpassed Tesla in global
EV sales. Last week, BYD announced cuts exceeding 10% on several of
its models and introduced new versions of four vehicles this week,
priced significantly lower than their predecessors.
Analysts Kelvin Lau and Evelyn Zhang from Daiwa Capital Markets
highlighted the impact of BYD’s pricing strategy, noting that it is
“exerting pressure on the overall industry” and “intensifies
competition among new-energy vehicle makers for 2024.”
In January, Tesla proactively reduced the starting price of its
entry-level Model 3 by 5.9% and the Model Y by 2.8%, indicating the
company’s ongoing commitment to maintaining a competitive edge in
the crucial Chinese market amidst an escalating price war.
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