Tesla announced further price cuts in China for the second time in a week, as the EV price war in the country continued to escalate.
According to local reports, the US EV maker announced on its official WeChat account on Wednesday it was cutting the price of its Model S sedans and Model X SUVs by up to CNY70,000 (US$9,700) to CNY754,900 ($104,850) and CNY836,000 ($115,500) respectively.
That followed cuts of up to CNY140,000 announced earlier in the week on its Model Y SUV, while other incentives were extended on the Model 3 to reduce inventory amid reports of plunging shipments from its Shanghai plant in July from the previous month.
Tesla was reported to have shipped 64,300 EVs from Shanghai plant in July for sale domestically and for export, more than double last year’s depressed volume when the plant underwent an upgrade, but down 31% from the 93,600 units shipped in June. In the first seven months of 2023, the plant shipped 540,000 Model 3s and Model Ys, up 68% year on year.
Competition in China’s EV market continued to intensify as sales growth slowed sharply in the first half of 2023 from the breakneck speeds seen in the previous two years, while domestic manufacturers continue to gain market share with a very busy pipeline of new model launches.
Recent EV price cuts also reflect falling manufacturing input costs, with the price of key battery materials such as lithium having fallen sharply since the end of last year.
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While China remained the world’s largest EV market, the rate of growth in the first half of 2023 slowed to 32% to 2,719,000 deliveries according to wholesale data from the China Association of Automobile Manufacturers units after growing by 84% to 5,364,000 units in the whole of 2022. First half sales of plug in hybrids continued to grow strongly, however, by 91% to 1,026,000 units.
The Chinese economy has also failed to rebound strongly from last year’s strict Covid lockdowns, with consumers reining in spending amid high levels of youth unemployment and rising economic uncertainty.
Local automaker BYD was the biggest winner in China’s EV market in the last two years with sales surging a further 91% to 616,810 units in the first half of 2023 while its plug in hybrid sales doubled to 631,351 units.