Tesla Implements Substantial Price Reductions for Model 3 and Model Y in China Amidst Intense Competition.
On January 12, Tesla (NASDAQ: TSLA) made significant price cuts of nearly 6% for both versions of the Model 3 and nearly 3% for two out of three versions of the Model Y. This move intensifies the already competitive landscape in the Chinese market for the U.S. electric vehicle (EV) manufacturer.
Tesla’s factory in Shanghai, the largest in the world with an annual capacity exceeding 950,000 vehicles, produces both the Model 3 and Model Y. The Model 3, available in two versions in China, witnessed price reductions from its previous starting prices of RMB 261,400 ($36,470) and RMB 297,400. The entry-level Model 3 now starts at RMB 245,900, down 5.93%, and the Model 3 Long Range version starts at RMB 285,900, a decrease of 3.87%.
Similarly, the Model Y, offered in three versions, experienced price cuts from its initial prices of RMB 266,400, RMB 306,400, and RMB 363. The base Model Y now starts at RMB 258,900, down 2.82%, and the Model Y Long Range at RMB 299,900, a reduction of 2.12%. The Model Y Performance retains its starting price of RMB 363,900.
The current Model 3 in China, codenamed Highland, was pre-sold on September 1, 2023, officially going on sale on October 19. The updated Model Y launched on October 1, with deliveries beginning in mid-October.
Tesla, having experienced several price increases in China since October, sold 75,805 vehicles in December, marking an 80.81% YoY increase. For the full year 2023, Tesla sold 603,664 vehicles in China, a 37.27% YoY growth.
Despite the Model 3’s first major update in six years, its sales in China faced challenges from numerous competing models, contributing 20.78% of Tesla’s December sales. In contrast, the Model Y remains popular, selling 60,055 units in December and contributing 79.22% to Tesla’s monthly retail sales in China.
Tesla’s strategic price cut on January 6, 2023, with reductions as high as RMB 48,000, triggered a fierce price war in China’s EV market.
