Tesla Prices Slashed by 40% in China, Making it Cheaper Than US

Tesla's share price is likely to continue to fall as the company cuts prices in China's increasingly competitive electric vehicle market.

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Tesla's locally built Model Y sport utility vehicle has seen a price drop to 259,900 yuan ($37,875), down from 288,900 yuan. This standard-range, rear-wheel drive version is now 43% cheaper than the most basic Model Y available in the US, which has a longer range and is all-wheel drive. Friday's price cut also lowers the Model 3 to 229,900 yuan from 265,900 yuan, making it about 30% cheaper than in the US.

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Tesla cut prices in October, as competition in China's mass market and premium EV segments increased from domestic players like BYD Co., Xpeng Inc. and Nio Inc., as well as international companies like Porsche AG and Mercedes Benz Group AG. deteriorating prospects in the market and Chief Executive Officer Elon Musk's preoccupation with Twitter Inc. contributed to Tesla's stock plunging 37% in December and 65% in 2022, its worst monthly and yearly performance. The shares dropped by 6.4% to $103.25 before the start of regular trading on Friday. This was a significant drop from the previous day's close.

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Tesla has announced that its newly introduced Model S, with a redesigned interior, will be priced at 789,900 yuan in China. The Model S Plaid, Tesla's fastest car, 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.
Tesla is a dominant player in China's mass market of EVs that cost no more than 300,000 yuan. The company 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.

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Tesla shipped over 710,000 vehicles from Shanghai in 2022, representing about 54% of its worldwide sales. However, deliveries slowed to about 56,000 in December, almost half the November number, as production was suspended due to equipment upgrades and lackluster demand. This week, Tesla announced that global deliveries were lower than expected for a third-straight quarter, prompting a 12% plunge in its share price Tuesday.

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The automaker also adjusted prices of its Model 3 and Model Y cars in Japan on Friday. The entry-level Model 3 was cut by 10% to 5.4 million yen ($40,300), while the Model Y was reduced by 9.9% to 5.8 million yen.