Battle for market share: Tesla cuts electric car prices in mainland China, in line with US, as sales slow

Earlier this month, Tesla had increased the price of the Model Y SUV by almost 2 percent, in an attempt to buck the trend of price cuts in China.

Tesla on Sunday cut the price of its entry-level Model 3 from 245,900 yuan ($33,965) to 231,900 yuan, and now offers the Model Y starting at 249,900 yuan, compared to 263,900 yuan previously.

The US electric vehicle (EV) maker also cut prices of the more expensive Model S and Model X by more than 15 percent and 19 percent respectively in its second-largest market.

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“Tesla’s Shanghai-made Model 3 and Model Y vehicles remain attractive to young drivers in China who view the US automaker as the global leader in EV development,” said Zhao Zhen, sales director at Shanghai-based dealer Wan Zhuo Car.

“Further price reductions are expected if delivery volumes do not meet the company’s expectations.”

The new round of price cuts in China followed the company cutting prices in the US, its largest market, on Saturday.

Tesla said earlier this month that it had delivered about 387,000 vehicles in the first three months of this year, down more than 8 percent from the same period a year ago.

Shares of the American EV manufacturer have fallen by more than 40 percent since the beginning of this year. It is expected to report first-quarter results on April 23.

The price cuts also came after Tesla cut its labor costs in China last week, which particularly hit its sales force amid falling deliveries in the world’s largest EV market.

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In mainland China, the company’s sales between January and March fell 3.6 percent from the fourth quarter of 2023 to 132,420 units.

While Tesla remains the second-largest EV seller in China, it faces cutthroat competition as domestic rivals continue to offer aggressive discounts.

BYD, the world’s best-selling EV maker, has cut prices on almost all of its cars by 5 to 20 percent since late February as industry growth in China showed signs of slowing.

Guangzhou-based Xpeng said on Saturday it will offer subsidies for four EV models, while Aion, an EV arm of state-owned Guangzhou Automobile Group, also announced price cuts earlier this week.

Cui Dongshu, general secretary of the China Passenger Car Association, said in February that most mainland automakers are likely to continue offering discounts to maintain market share.