China's CSI defense index down 3%

China's CSI defense index down 3%

In a strategic move to boost sales in the competitive Chinese electric vehicle (EV) market, Tesla has reduced the price of its new, longer-range Model 3 variant by nearly 4 percent. The price cut, announced just before deliveries are set to commence, is aimed at attracting more middle-income consumers and countering the rising threat from local competitors.

The Shanghai-made Model 3, with a driving range of 830 kilometers, is now priced at 259,500 yuan (approximately US$36,391), a 10,000 yuan reduction from the previously announced price of 269,500 yuan. Deliveries are expected to begin this month. Additionally, Tesla is offering mainland buyers a subsidy of 8,000 yuan for insurance and a five-year interest-free loan that provides 20,000 yuan in savings [1].

Tesla's price reduction is part of its broader strategy to address the decline in its market share in China. According to the China Passenger Car Association (CPCA), Tesla's share of the mainland EV market fell to 3.2 percent in June. The company's sales accounted for 16 percent of the national total in 2020, when the Shanghai factory opened [1].

The move is seen as a response to the increasing competition from local rivals, whose vehicles are generally more affordable. Phate Zhang, founder of Shanghai-based industry data provider CnEVPost, noted, "The price reduction is a surprise move by Tesla to attract more middle-income consumers. It is facing mounting challenges from its local rivals" [1].

Tesla has consistently adjusted the prices of its locally built vehicles based on production costs. The company is also introducing a six-seat variant of the Model Y this month, which aims to cater to wealthy Chinese customers who prefer spacious, longer-range EVs [1].

References:
[1] https://www.scmp.com/business/china-business/article/3323875/tesla-cuts-price-new-model-3-china-moment-truth-nears-variant-strategy?module=top_story&pgtype=homepage