Tesla cuts China prices again, triggering slump in auto stocks

Hong Kong – Tesla rolled out a new round of price cuts in China, sending auto stocks tumbling on concerns that the move will spark again a bruising price war that had showed signs of abating.

The automaker reduced the prices of the top-end long-range and performance versions of the Model Y sport utility vehicle by 14,000 yuan (S$2,600) to 299,900 yuan and 349,900 yuan respectively, according to a post on its Weibo account on Monday. An 8,000 yuan insurance subsidy on newly purchased Model 3 rear-wheel drive vehicles was also extended until the end of September.

The cuts follow the likes of Geely Automobile Holdings’ Zeekr brand, which lowered prices as much as 37,000 yuan last week. Zhejiang Leapmotor Technologies cut by as much as 20,000 yuan at the start of August.

Tesla triggered the price war with an initial round of cuts in 2022 before

further discounts in January that left Tesla’s locally made cars as much as 14 per cent cheaper

than last year and, in some cases, almost 50 per cent less expensive than in the United States and Europe.

Shares of China’s best-selling auto brand BYD sank 7.6 per cent as at 11.40am in Hong Kong trading. Li Auto was down 3.9 per cent lower, while Xpeng fell 6.2 per cent and Leapmotor Technologies was off 6.4 per cent.

“Price competition has been and will remain an ongoing theme in China’s auto market,” said Ms Joanna Chen, an automobile analyst at Bloomberg Intelligence. “Tesla is trying to keep volume rolling after July sales showed its slowing order intake without new models to attract Chinese buyers.”

Tesla’s China deliveries slumped 31 per cent in July to the lowest level in 2023 – just as the electric-car maker plans to soon unveil its revamped Model 3 “Highland” sedan from its Shanghai factory.

Electric-vehicle sales in China declined in July from June,

although purchases shifted towards major players, with BYD, Li Auto and Nio all reporting new sales records. BLOOMBERG