Tesla Inc has recently opted for a price cut in China, making its cars up to 50 per cent cheaper than some markets, and this could create havoc — spur the sales of its vehicles manifold and may also prompt some of its rivals to shut shop.
Elon Musk’s electric vehicle (EV) company, which has a mega presence in China, slashed the prices of its cars, which are produced at its factory on the outskirts of Shanghai.
After Tesla, BYD and Mercedes-Benz may slash prices in China -- Photo: Tesla. |
Tesla EV price cuts in China
In January, Tesla went for a price cut of up to 15 per cent. Now, its cars are almost up to 50 per cent cheaper than in the US and Europe.
In December 2022, China saw its lowest shipment of cars, prompting Tesla to opt for the price cuts.
After this move by Tesla, its rivals followed suit with big names like Mercedes-Benz as well as Volkswagen and local start-ups such as Xpeng Inc and Nio Inc slashing prices by up to $10,000.
Covid woes for China’s car industry
These price cuts come at a time when China’s economy is still grappling to come out of the Covid blues, which it has been suffering for the last few months.
This has slowed down auto sales in the country by almost 40 per cent. Along with Covid curbs, supply chain disruptions have further dented Tesla sales numbers not only in China, but also globally.
Despite the slowdown in China, certain category of vehicles saw commendable sales.
Those such as fully electric and plug-in hybrids saw sales double to 5.5 million last year.
And, nearly a third of those were BYD cars. Also, Tesla shipped 100,000 electric cars from China in November last year.
China EV market to surge
China is adopting EVs in a big way and its market is undergoing a “profound reshuffle” said the chief of a car company.
The problem with China’s car industry is that it has too many auto makers, and that is why some may face bankruptcy after Tesla’s price cuts.
As the Covid curbs ease, EV sales in China could be eight-fold more than the US and thrice that of Europe, according to an expert.
Moreover, the price cuts by Tesla have made EVs a more attractive option compared to gasoline cars, further squeezing the traditional market.
And, there is more to it — around 155 new pure electric and plug-in hybrid vehicle models are set to be unveiled in China in 2023 itself.
E-Vroooom’s views
Even as Tesla creates havoc with its price cuts, BYD, China’s mega electric vehicles player, may again follow suit with its range of discounts, and hence, with the one-upmanship by these EV players, their China margins may be on the decline in the mid term.
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