HONG KONG—
Tesla Inc.
made the steepest price cuts so far on its Model 3 and Model Y cars sold in China, after deliveries of its Shanghai-made cars plunged in December to cap a challenging year globally for the electric-vehicle maker.
Prices for Tesla’s two most popular electric car models—made at its Shanghai gigafactory—will be reduced by between roughly 6% and 13%, the U.S. car maker said on Chinese social media Friday. Including the latest discounts, Model Y prices now start at the equivalent of around $37,000. The Model 3 starts at roughly $32,700, more than 30% cheaper than the price of a standard Model 3 selling on Tesla’s U.S. website.
Tesla said the cuts were made possible by engineering innovations and cost controls. The company said it is responding to the Chinese government’s calls to boost the economy and encourage consumption.
The EV giant’s move comes after it made several price cuts late last year and offered other short-term discounts to lure buyers. Those failed to juice Tesla’s performance with deliveries of China-made cars—which include sales in the country and exports—falling by almost half in December from November, to 55,800, according to data released Thursday by the China Passenger Car Association.
The U.S. company delivered more than 710,000 China-made EVs in 2022, up 50% from a year earlier, accounting for more than half of its global total. But its share of the world’s biggest EV market has been ebbing in the face of greater Chinese competition. Chinese rival
BYD Co.
, whose cars are generally cheaper, delivered around 911,000 fully electric vehicles last year, almost three times that of 2021.
Production at Tesla’s Shanghai plant was stop-and-start at times this year as a result of Covid-19 outbreaks and for upgrades to assembly lines to boost production capacity. Deliveries dipped in April and in July as a result. Globally, Tesla delivered fewer vehicles in 2022 than it initially targeted, capping a year during which the stock suffered its worst annual performance as demand appeared to soften and Covid-related production disruptions persisted in China. Its share price fell more than 60%, with some investors complaining that Chief Executive
diverted his attention from the car company to his newly acquired Twitter Inc.
China accounted for 24% of Tesla’s global revenue for the first three quarters of 2022, according to its SEC filings.
Tesla also lowered prices in Japan on major models by nearly 10% Friday. Last month, the company doubled down on discounts on the same two car models in the U.S. offering a $7,500 credit and 10,000 miles of free Supercharging on its two most popular models through the end of 2022.
After several price hikes during the first half of 2022 globally, amid surging material costs, Tesla began reducing its electric vehicles’ price tags in China in October. In the latest price cuts, Tesla’s long-range version of the Model Y saw the biggest reduction, of more than $7,000.
Some interested car shoppers held off buying late last year in anticipation of further discounts after Tesla cut prices in October and eventually got what they wanted, said
Kelvin Lau,
an auto analyst at Daiwa Capital Markets. “The discounts were frequent, so people might as well wait a bit longer,” he said.
Chinese consumers also have many models to choose from as domestic brands launch new EVs much more frequently than Tesla does, he said.
The company is facing a squeeze from lower-cost EVs from brands such as BYD and state-owned
Chongqing Changan Automobile Co.
, and from higher-end brands such as Zhejiang Geely Holding Group’s ZEEKR, or startups
NIO Inc.
and
Xpeng Inc.
BYD was among Chinese and foreign EV brands that raised prices as state subsidies came to an end Dec. 31. BYD, which has seen soaring sales of its all-electric and plug-in vehicles, said last week that prices would increase from $300 to almost $900 for a vehicle starting this year. The company’s deliveries in December dropped slightly compared with November but more than doubled that of a year earlier.
Volkswagen AG’s
joint-ventures increased prices for some of their EVs, while newcomer Xpeng told customers their prices will remain unchanged even though subsidies have ended.
Tesla’s official social-media announcement with the latest prices didn’t please everyone. Dozens posted negative comments Friday, with some owners saying they had recently paid a higher price.
“Existing car owners got stabbed in the back just a month after buying one,” one user wrote.
Write to Selina Cheng at selina.cheng@wsj.com
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