The move comes as demand for electric vehicles (EVs) in China, the world's largest auto market, has begun to slow. In response to the downturn, Tesla has implemented a series of price cuts and incentives totaling up to CNY 10,000 ($1,508) over the past three months. The latest price cut, which took effect on Friday, resulted in a reduction of 13% to 24% on Tesla's September prices, according to Reuters. All versions of the Model 3 and Model Y were reduced by 6% to 13.5%.
Softening Demand Forces Tesla to Absorb End of Subsidy Program
The price cuts come after Tesla's December deliveries in China hit their lowest point in five months and just days after the Chinese government ended its subsidy program for EVs. As demand has softened, Tesla and its competitors have had to absorb the impact of this decision. China Merchants Bank International (CMBI), which predicted in July that China's EV market was headed for a price war, said that Tesla's latest price cuts confirm this prediction and that the company may have to do more, especially as it faces increased competition from Chinese rivals.
BYD Sees Sales Double in December While Tesla's Fall 42%
BYD, a Chinese EV maker that offers a wider range of both plug-in and pure electric vehicles, saw its retail sales in China double in December, while Tesla's sales fell by 42%, according to data from CMBI. The Model 3 and Model Y have been the only models offered by Tesla in China, though the company announced prices for the Model S and Model X in China on Friday. In order to boost sales, Tesla may need to further cut prices and expand its sales network in China's lower-tier cities, according to CMBI analyst Shi Ji.