Electric car company rivals
Tesla has cut starting prices for its Model 3 and Model Y models in China by 9%, reversing an industry-wide upward trend amid signs of slowing demand in the world’s largest auto market. Monday’s list of electric vehicles (EVs) in China will be Tesla’s first in China for 2022. This comes after Tesla began offering insurance incentives to buyers last month. Tesla CEO Elon Musk slashed prices by nearly a tenth. It said last week that a “sales crisis” in China and Europe is affecting demand for its electric vehicles. Data on Monday showed the world’s No. 1 retailer. The economy expanded 2.5% in September, below expectations for a 3.3% increase and less than half the 5.4% increase in August. Analysts warned of rising inventories in China, where sales growth slowed in September as sales of electric vehicles rose at the slowest pace in five months. U.S. and some Chinese rivals have rallied several times since last year due to higher commodity prices. But Tesla also regularly adjusts its car prices in China, including to reflect cuts in government subsidies. Tesla told Reuters it was adjusting prices based on spending. The company said that despite the economic impact of China’s zero-COVID-19 tightening, its Shanghai Gigafactory had improved capacity utilization, while the supply chain remained stable, reducing costs. Model 3 starting price has dropped to $265,900
($36,727) from 279,900 yuan, while the Model Y sport utility vehicle has dropped to 288,900 yuan from the 316,900 yuan listed on the Chinese website. Tesla upgraded its Shanghai plant earlier this year, and the development has brought the plant’s weekly production capacity to about 22,000 from about 17,000 in June since the Shanghai plant started production in December 2019. Made in China was 83,135 vehicles in September, up 8% from August.
But analysts at China Merchants Bank International (CMBI) warned last week that 2023 will bring more competition to the electric vehicle industry and said higher sales of electric and hybrid vehicles are expected. “The devaluation highlights a potential price war that we have highlighted since the last August,” CMBI analysts said. “Tesla is expected to achieve capacity expansion in the third quarter of 2022 (Q3 2022), and we expect other new Energy vehicle (NEV) manufacturers will follow suit. “China’s new energy vehicle production capacity will increase significantly in the next few years.”
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