Tesla considers cutting prices for cars made in China by 20% next year

BEIJING, Dec. 18 (Beijing time) afternoon, according tomedia reports, a person familiar with the matter said, Tesla is considering next year’s Chinese-made Model 3 series car prices cut by 20 percent or more, hoping to attract more consumers in the face of china’s slowing electric car market. Tesla intends to cut costs by using more local parts, which would reduce the use of imported parts and avoid tariffs, the person said.

Tesla considers cutting prices for cars made in China by 20% next year

They say the new car will be built at Tesla’s new Shanghai super factory, where the original price of 355,800 yuan (about $50,800) could start to fall in the second half of 2020.

Elon Musk, chief executive, has focused on the multibillion-dollar Shanghai plant, Tesla’s first outside the United States. Tesla’s choice to cut prices at this time is bound to put pressure on local manufacturers such as Weilai and Xiaopeng, which are following suit.

Electric car makers are facing an unprecedented downturn in the market, and competition is intensifying. Sales of electric cars have been falling for months in China after the government cut subsidies.

Most of the cost cuts will focus on batteries, which are often the most expensive part of an electric car. Earlier, people familiar with the matter revealed in August that Tesla’s current battery supplier is only one panasonic in Japan, but the future may be different because the company has agreed to buy batteries from LG Chem, which is about 200 miles northwest of Shanghai. Last month, people familiar with the matter said Tesla had reached another deal to use batteries supplied by China’s Ningde-era new energy technology as early as next year.

Tesla, meanwhile, has been making final preparations for the delivery of electric vehicles made at its Shanghai plant. This month, Chinese authorities revealed that the locally made Model 3 sedan would be eligible for a state subsidy of up to 24,750 yuan per vehicle, though it is unclear how much of the subsidy will go directly to consumers.

People familiar with the matter also said the size and timing of the price cuts could change depending on market conditions. Tesla’s representative in China declined to comment.

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