Tesla’s new price cuts may be an attempt to fend off competitors as it faces challenges in China’s fast-growing electric vehicle market. Local manufacturers like Xpeng and Nio are aggressively pushing prices down to compete with the Silicon Valley-based carmaker.
Tesla, which slashed prices on some Model 3 and Model Y vehicles in the US earlier this month, has now reduced the cost of those cars in Hong Kong. According to the company’s website, it will offer discounts on multiple variants of the Model 3 and Model Y. The discounts range from 6% to 11.9%.
The Model 3 Performance will see the most significant price reduction of 14%, followed by the Long Range version. The Model Y will be discounted by 11%, while the Standard Range will be reduced by 10%. The latter is unavailable in the country, with the vehicle becoming an “off-the-menu” option after its launch last year.
The new Chinese pricing is effective from Aug. 4, with the first deliveries expected in September. The company’s cheapest Model 3 variant is now the $39,990 rear-wheel drive (RWD) vehicle, which is almost 50% cheaper than its cost in the US. However, the RWD Model 3’s price tag in China is still higher than what is available elsewhere because the car will no longer be eligible for a $7,500 federal tax credit under new rules governing where EV batteries can be sourced.
While it is unclear whether Tesla’s newest price cuts will spur demand, the company has been attempting to boost sales in China for the past few months. The company’s stock had plunged in the country since December, when its delivery figures missed expectations, prompting it to slash prices to retain its dominance in China’s mass market of EVs that cost less than 300,000 yuan ($36,400).
Elon Musk said on Friday that the upgraded factory in Shanghai can now produce 14,000 Model Ys and 8,000 Model 3s per week. The Shanghai plant is currently the world’s largest and produces half of Tesla’s global vehicles yearly.
The company is also upgrading the production line at its Gigafactory in Nevada to double its capacity. The upgrade will allow the plant to make more than 1.2 million vehicles yearly, making it one of the world’s giant car factories. The expansion will be crucial to Tesla’s financial health as it struggles with low demand and the ramp-up of its Model 3 sedan. The company expects to report its quarterly earnings later this week. Its shares rose 2.5% to close at $206.30 on Monday. The stock is up 67% this year, recouping some of its losses after losing two-thirds of its value in 2023.
