Tesla has slashed Model 3 and Model Y prices by as much as the equivalent of $7,000 in China, raising demand concerns in the important market. There is some good news, however: The $35,000 Tesla is back!
We just reported earlier today that there are increasing demand concerns for Tesla in China.
One of the most significant indicators that Tesla is having demand issues is when the automaker decides to reduce prices.
Over the last two years, Tesla’s prices have consistently gone up until October in China, when Tesla reduced the price of its electric vehicles for the first time.
Now the automaker is again reducing prices of Model 3 and Model Y, the two vehicles it produces at Gigafactory Shanghai, and the price drop is significant.
Chinese Prices
| Model | Price Before | Price After | Percent Change |
|---|---|---|---|
| Model 3(RWD) | 265900 | 229900 | -13.54% |
| Model 3 Performance | 349900 | 329900 | -5.72% |
| Model Y(RWD) | 288900 | 259900 | -10.04% |
| Model Y LR | 357900 | 309900 | -13.41% |
| Model Y Performance | 397900 | 359900 | -9.55% |
USD Equivalents
| Model | Price Before | Price After | Percent Change |
|---|---|---|---|
| Model 3(RWD) | $ 38,712.41 | $ 33,471.16 | -13.54% |
| Model 3 Performance | $ 50,941.98 | $ 48,030.17 | -5.72% |
| Model Y(RWD) | $ 42,060.98 | $ 37,838.87 | -10.04% |
| Model Y LR | $ 52,106.70 | $ 45,118.37 | -13.41% |
| Model Y Performance | $ 57,930.30 | $ 52,397.88 | -9.55% |
The price has dropped by as much as RMB 48,000 for the Model Y Long Range. That’s the equivalent of a $7,000 USD price drop on the vehicle. You could argue that the price drop also brings back Tesla’s $35,000 Model 3.
The Model 3 rear-wheel-drive, Tesla’s cheapest vehicle that was once promised to start at $35,000 but starts at $47,000 in the US, has received a RMB 36,000 price drop to RMB 229,900, or $33,430 USD.
This is an all-time low price for the vehicle – even in China. The cut also follows with Chinese tax incentives ending at the end of the Gregorian calendar year. However, this is the second cut in recent months which has brought the overall price of the vehicles down 12-24% overall.
Here are all the overnight price changes for each Tesla model in China:
- Model 3 Standard Range RWD: down RMB 36,000 to RMB 229,900 ($33,430)
- Model 3 Performance: down RMB 20,000 to RMB 329,900 ($48,000)
- Model Y Standard Range: down RMB 29,000 to RMB 259,900 ($37,830)
- Model Y Long Range: down RMB 48,000 to RMB 309,900 ($45,110)
- Model Y Performance: down RMB 38,000 to RMB 359,900 ($52,400)
Most models are also showing a 1-4 weeks delivery lead time, which is a short delivery timeline for Tesla in China early in a quarter. It would further point to Tesla not having a strong backlog of orders in the country.
Top comment by Brian Drake
I think we will continue to see Tesla's margins shrink. That does not necessarily mean Tesla is in trouble, it simply means the EV market is becoming more competitive and Tesla's huge margins will disappear.
But over the next couple of years for Tesla to hold onto their leadership position they will need to start becoming serious about Quality, Repairs, and meeting customers expectations (not simply letting Musk decide what the customer wants).
While Tesla may still hold a lead, the other OEMs are much better at these issues. So will Tesla improve quick enough? Or will the other OEMs catch and pass them?
Tesla’s stock is down more than 4% in pre-market trading today on the news of the price cuts in China and is closing in on the $100/share price point.
Electrek’s Take
The good news is that these prices are likely going to make Tesla much more competitive with the increased EV competition in the country and could likely boost sales significantly in the important market.
However, it will massively cut into Tesla’s gross margin and overall profits.
We will keep a close eye on Tesla’s Chinese production and deliveries in the coming months order to track how the price drop affects Tesla’s performance in the country.
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