Tesla Inc. shares extended their slump after the carmaker made another round of price cuts in China’s increasingly competitive electric vehicle market.
(Bloomberg) — Tesla Inc. shares extended their slump after the carmaker made another round of price cuts in China’s increasingly competitive electric vehicle market.
The starting price for Tesla’s locally built Model Y sport utility vehicle has dropped 10% to a new low of 259,900 yuan ($37,875), according to the company’s China website. That standard-range, rear-wheel-drive version costs 43% less than the base Model Y available in the US, which has a longer range and is all-wheel-drive. Tesla also lowered the price of the Model 3 by 14% to 229,900 yuan, about 30% cheaper than in the US.
Tesla already cut prices in October, as China’s mass market and premium EV segments becomes increasingly crowded by the likes of domestic players BYD Co., Xpeng Inc. and Nio Inc., as well as international stalwarts Porsche AG and Mercedes Benz Group AG.
“This time it’s serious,” Chris McNally, an Evercore ISI analyst with the equivalent of a hold rating on Tesla, said in a note. The new entry price for the Model 3 is likely to combat BYD’s recently introduced and popular Seal model, he wrote.
Tesla shares fell 3.5% as of 9:55 a.m. New York time Friday. Signs of deteriorating prospects for Tesla in China and Chief Executive Officer Elon Musk’s preoccupation with Twitter Inc. contributed to the carmaker’s stock plunging 37% in December and 65% in 2022, its worst monthly and yearly performances.
Tesla isn’t alone in making dramatic cuts in China — Mercedes heavily discounted several EQ models in November. Still, local manufacturers now command the lion’s share of the country’s massive plug-in vehicle market, with Berkshire Hathaway Inc.-backed BYD raising prices and registering record sales.
Tesla is newly introducing the Model S in China and pricing the sedan at 789,900 yuan. The Plaid version — Tesla’s quickest car, taking 2.1 seconds to go from zero to 100 kilometers (62 miles) per hour — will be sold from 1.01 million yuan. The Model X SUV is priced from 879,900 yuan, and the Model X Plaid starts at 1.04 million yuan. Deliveries will begin in the second quarter.
The Austin, Texas-based company is a dominant player in China’s mass market of EVs that cost no more than 300,000 yuan. Tesla localized production of Model 3 sedans at the end of 2019 when it opened a factory in Shanghai capable of churning out 450,000 cars a year. It started shipping Model Ys from there in January 2021.
Tesla shipped more than 710,000 vehicles from Shanghai in 2022, or about 52% of its worldwide production. Wholesales slowed to about 56,000 in December, almost half the November number, as production was suspended due to equipment upgrades and lackluster demand. Earlier this week, Tesla announced that global deliveries were lower than expected for a third quarter in a row, prompting a 12% plunge in its share price Tuesday.
The automaker also lowered prices in Japan on Friday, cutting the entry-level Model 3 by 10% to 5.4 million yen ($40,300), while the Model Y dropped 9.9% to 5.8 million yen.
–With assistance from Masumi Suga.
(Updates share trading in the fifth paragraph.)
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