This morning, Huxiu published a post stating that after experiencing two promotions, Tesla’s order growth still did not meet expectations. Therefore, Tesla plans to launch new “price reduction measures” to promote sales by the end of 2022.
The post immediately caused a stir on social media, with discussions about Tesla’s price reductions increasing. Soon after, Tesla officially denied the rumors, saying that the “news is not true.”
Insurance subsidies, price reduction rumors, denial, and price reductions – the same plot is familiar.
On September 16th of this year, according to an internal email from Tesla, Tesla owners who completed delivery between September 16th and September 30th, and who chose to purchase insurance in-store that includes compulsory insurance and vehicle damage insurance, could receive a subsidy of 8,000 yuan, which can be used directly to offset the car price.
Before this, there were already rumors about Tesla’s price reductions on the market, and the launch of insurance subsidies has intensified speculation.
On September 30th, Huxiu’s post pushed the rumors to a climax, pointing out that Tesla’s domestic models, Model 3 and Model Y, may undergo significant price reductions. Model Y’s price reduction may go up to 40,000 yuan, and the starting price of the Model Y rear-wheel-drive model may be between 270,000 yuan to 290,000 yuan.On September 30, Tesla officially denied the rumor of price reduction. But not long after, on October 24, Tesla China announced a price reduction of up to 37,000 yuan for all of its vehicle models, including the Model 3 and Model Y, which are reduced as follows:
- the rear-wheel-drive version of Model 3 is reduced from 279,900 yuan to 265,900 yuan;
- the performance version of Model 3 is reduced from 367,900 yuan to 349,900 yuan;
- the rear-wheel-drive version of Model Y is reduced from 316,900 yuan to 288,900 yuan;
- the long-endurance version of Model Y is reduced from 394,900 yuan to 357,900 yuan;
- the performance version of Model Y is reduced from 417,900 yuan to 397,900 yuan.
According to Sun Shaojun, the founder of Chefans, the number of orders Tesla received from this round of price reduction was only about 50,000, and it is still unable to fully digest the radical production capacity of Tesla Shanghai factory.
According to a report from CMB International, the production of Tesla Shanghai factory in October was 87,706 units, exceeding the delivery volume of 71,704 units (including China’s domestic market and exports), about 16,000 units. It is understood that this is the biggest gap between production and sales since Tesla opened its Shanghai factory at the end of 2019.
Therefore, shortly after the price reduction, Tesla launched an insurance subsidy on November 8, and the situation seems to have entered a new cycle:
- From November 8 to November 30, if the car owner purchases the corresponding car insurance from an insurance company cooperating with Tesla, they can enjoy a subsidy of 8,000 yuan;
- for cars delivered from December 1st to December 31st, the subsidy is reduced to 4,000 yuan.
As expected, social media is once again filled with rumors of Tesla’s price reduction.
Today’s news from the Hu Xiu website is the same as always, and Tesla’s official response seems to have increased the credibility of the rumor.
However, judging from the gross margin of the Model 3, Tesla does have some room for price reduction. In 2019, the gross margin of the Model 3 could reach as high as 30%, while most brands in the new energy vehicle industry have a gross margin between 10% and 15%. Therefore, even if the rumor is true and the price of the Model 3 is reduced to 219,900 yuan, its gross margin level will still be above average. At present, the price of the Model 3 has not reached its previous lowest point of 240,000 yuan, so a further price reduction is not impossible.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.