Tesla goes into its pockets to sell its EVs in China

Tesla is going deep into its pockets to offer discounts in order to sell its electric vehicles in China at the end of this quarter.

China is Tesla’s biggest market, and its performance greatly impacts its overall financial results.

Therefore, it’s important to keep a close eye on Tesla’s performance in China.

Like in other markets, Tesla often offers discounts toward the end of the quarter to try to lower its inventory as much as possible.

Several analysts have noted that Tesla seems to be digging deeper into its pockets to increase demand at the end of this quarter in China.

Tesla posted on Weibo, a local social media platform in China, about a slew of new incentives on its lineup in China valid if customers take delivery before March 31st:

Tesla says that the discounts add “up to RMB 34,600”, which is the equivalent of ~$4,800 USD.

It listed a bunch of different incentives on its website (translated from Chinese):

• Current Model Y rear-wheel drive version of the current car can enjoy an insurance subsidy of 8,000 yuan by purchasing the corresponding car insurance through a cooperative insurance agency. The current and original Model Y must be delivered before March 31.
• The designated paid car paint only costs 2,000 yuan (the price difference Reduction or exemption before delivery), you need to deliver cash and the original Model Y rear-wheel drive version before March 31.
• You can apply for annual interest rates starting as low as 1.99% (equivalent to an annualized interest rate starting from 3.65%, applicable to some banks). The annual interest rates for other existing cars on sale start as low as 2.5% (equivalent to an annualized interest rate starting from 4.58%).

We recently reported that Tesla is also increasing its end-of-quarter incentives in the US.

Electrek’s Take

These are significant discounts and incentives. Considering how many vehicles Tesla delivers in China, it will be interesting to see how it affects its gross margins, which have been consistently declining for more than a year now:

This price war will have to bottom out eventually, but it looks like we haven’t achieved that point yet.

It’s also interesting to see Tesla also applying incentives on Model 3. It hasn’t done that as much in the US since it more recently launched the new version. That new version, sometimes referred to as Highland, has been in China for more than 6 months.