Tesla Cuts Price of Its Cars in China, TSLA Stock Drops 3% in Pre-market

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Tesla is facing increasing challenges in China due to stricter COVID-19 regulations as well as increased competition from local electric car makers such as BYD.

world’s largest electric car maker Tesla Inc. (NASDAQ:TSLA) is decision made to cut the price of its cars in China, one of its most competitive markets. As per the latest development, Tesla has cut the price of its Model and Model Y vehicles.

tesla car price

The price of the Model 3 sedan in China has been reduced from 279,900 yuan to 265,900 Chinese yuan ($36,615). Similarly, the price of Model Y sports utility vehicles has come down to 288,900 yuan from the previous price of 316,900 yuan.

Tesla said its price cuts were because the company was forced to raise its prices in China and the US earlier this year due to rising raw material costs. Back in March, Tesla CEO Elon Musk warned that his electric car firm had seen “significant recent inflationary pressures in raw materials and logistics”.

In addition, the price of Tesla also comes as Elon Musk sees signs of a slowdown in China. Elon Musk confessed This during their earnings call last week. “China is facing a kind of slowdown” in most asset markets, he said.

During the quarter ended September 30, Tesla delivered a total of 343,000 vehicles, which fell short of analysts’ expectations. The company also fell short of revenue expectations during the third quarter. Tesla hasn’t given a breakdown of how many cars it sold in China in the last quarter.

Over the past month, Tesla’s stock has faced strong selling pressure of more than 20% from its peak. Following the recent news of car cost cuts in China, TSLA stock corrected another 3% in premarket trading on Monday, slipping below the $210 level.

Tesla’s growing challenge in China

Tesla has set up a massive Gigafactory in the Chinese city of Shanghai and the company completed the upgrade earlier this year. However, this year China’s stricter COVID-19 regulations have hit Tesla’s supply chain in a big way.

Tesla, on the other hand, faces increasing competition from local Chinese rivals such as the Warren Buffett-backed BYD. Also upstarts Nio and Xpeng.

For the first time ever, Warren Buffett-backed Chinese electric vehicle (EV) maker BYD overtook Tesla in global sales of electric vehicles. For the first six months of the year, BYD sold a total of 640,000 vehicles, while Tesla sold a total of 564,000 vehicles.

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Bhushan Akolkar

Bhushan is a fintech enthusiast and has a good grasp of the financial markets. His interest in economics and finance draws his attention to the newly emerging blockchain technology and cryptocurrency markets. He is constantly in the process of learning and keeps himself motivated by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and occasionally explores his culinary skills.

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