Tesla Chinas Price Reduction Shortly Drives Sales Media: Home-Made is the Best Way to Make a Big Sale

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 Tesla Chinas Price Reduction Shortly Drives Sales Media: Home-Made is the Best Way to Make a Big Sale


Yu Li Yan

Thanks to Chinas tariff adjustment, TSLA immediately set off a new round of price cuts, showing signs of a short-term recovery in sales in China.

First Financial Journalists survey found that Teslas sales performance quickly rebounded and single-store sales doubled. In this regard, industry experts pointed out to the first financial journalist that this is a small buying climax driven by the price reduction effect. However, Tesla is still challenged by the competition of BBA and other giants and new Chinese automobile manufacturers, as well as the decline of the overall automobile market. If we want to significantly increase sales in the Chinese market, it will be time for Tesla to achieve domestic production.

Tesla has cut prices many times in China

On December 14, the Tariff and Tax Commission of the State Council of China announced its decision to suspend tariffs on automobiles and parts originating in the United States for three months, covering 211 items, from January 1, 2019 to March 31, 2019. As soon as the policy came out, it attracted immediate attention from all sides.

On the evening of December 14, Tesla responded by lowering the prices of ModelS and ModelX, some of which it sells in China, by up to 11%. Among them, Tesla Model S75Ds current official website in China shows a price of 742,300 yuan, compared with 782,900 yuan before, a price cut of about 5%. The original price of Model S100D was 954.6 million yuan. After price reduction, the price was 849.6 million yuan, down 105,000 yuan, or about 11%.

Due to tariff changes and other factors, Tesla has adjusted its price four times in the year. In May 2018, the Ministry of Finance announced that the tariff on imported vehicles would be reduced from 25% to 15% from July 1. Tesla soon announced an official price cut, which began on July 1, lowering the prices of ModelS and ModelX in China, ranging from 48,300 yuan to 90,000 yuan. On July 6, the U.S. tariff on vehicle imports was adjusted from 15% to 40%. Teslas prices rose across the board. Among them, ModelS75D, which had the smallest increase, rose 139,300 yuan to 849,900 yuan, while ModelXP100D, which had the largest increase, rose 255,600 yuan to 1572,000 yuan. Tesla rose slightly again in mid-August.

Teslas sales in China have also entered a frozen state due to the rise in its own prices and the continuous decline in the overall Chinese car market in recent months. According to data from the National Ride Federation, Teslas sales in China fell by 37% in the third quarter of 2018, while in October 2018, Teslas total sales in China fell by 70% to 211 vehicles. Among all the models Tesla sells in China, the main model Model S sold only 50, down 82%, while the other main model Model X sold only 161, down 62%.

In response, Tesla said the company did not publish regional and monthly sales data. In response, Cui Dongshu, Secretary-General of the National Riding Federation, pointed out to the First Financial and Economic Journalist that tariff fluctuations do have a great impact on Tesla, which currently relies solely on imported cars. In addition, consumersperception of unreasonable prices has become an important factor restricting Teslas sales in China.

Low Price Causes Small Climax of Single Store Sales

When the staff of Tesla Experience Store in downtown Shanghai reflected the sales situation of the first financial reporter in recent days, they said that this initiative price reduction accompanied by tariff adjustment took place last weekend. At present, the sales of single stores have doubled compared with before. Many consumers who come to test drive will place orders when they see existing cars. In addition, many consumers who had previously visited have also decided to order cars.

The staff of another Tesla store in Shanghai confirmed the growth of sales in recent days to the First Financial Journalist and said that the lowest prices of several Tesla main models have been listed in the Chinese market. Although according to the new tariff policy of China, it will not change the tariff levy standards for Tesla-related products until January 1, 2019, Tesla is half ahead of schedule. The price has been lowered in June, partly subsidized by Tesla, in order to boost Teslas sales in China.

A Tesla owner told First Financial Journalist that Teslas price reduction was very fast. However, on the basis of the price reduction not long ago, he is worried that the price of Teslas used car market will be adjusted and fluctuated again because of tariff reduction.

Teslas continuous price cuts will promote a new round of small buying climax. However, Mei Songlin also pointed out that the sales effect of Teslas price reduction would be partly offset by the recent market hotspots such as the frequent listing of new cars by new car makers.

At present, China is Teslas second largest market in the world. In 2017, Teslas sales in China doubled, totaling more than $2 billion. But tariffs and the overall decline in Chinas car market have already affected sales in China, and Elon Musk, Teslas CEO, previously acknowledged the impact in his third-quarter report: We have managed to increase growth in North America and Europe to offset the decline in the Chinese market. Teslas predominant position in Chinas electric vehicle market has indeed been challenged. In addition to the new local auto makers such as Weilai and Xiaopeng Automobile, Tesla has to face competition from international traditional auto giants such as BMW and Mercedes-Benz. In the same price of pure electric vehicles, BMW i3, Mercedes-Benz C, Audi A4 and Chevrolet Bolt can only compete with Tesla Model 3. Looking further ahead, Mei Songlin said Teslas sales in China would have to be substantially increased by the time it was domestically produced. Because, the continuous growth of automobile product sales still depends on the comprehensive competitive advantages such as the continuous improvement of product performance-price ratio. Source: First Financial Responsibility Editor: Yao Liwei_NT6056

At present, China is Teslas second largest market in the world. In 2017, Teslas sales in China doubled, totaling more than $2 billion. But tariffs and the overall decline in Chinas car market have already affected sales in China, and Elon Musk, Teslas CEO, previously acknowledged the impact in his third-quarter report: We have managed to increase growth in North America and Europe to offset the decline in the Chinese market.

Teslas predominant position in Chinas electric vehicle market has indeed been challenged. In addition to the new local auto makers such as Weilai and Xiaopeng Automobile, Tesla has to face competition from international traditional auto giants such as BMW and Mercedes-Benz. In the same price of pure electric vehicles, BMW i3, Mercedes-Benz C, Audi A4 and Chevrolet Bolt can only compete with Tesla Model 3.

Looking further ahead, Mei Songlin said Teslas sales in China would have to be substantially increased by the time it was domestically produced. Because, the continuous growth of automobile product sales still depends on the comprehensive competitive advantages such as the continuous improvement of product performance-price ratio.