[Correspondent Diary] Chinese Netizens 'Buzzing' Over Tesla Model Y Price

Tesla Prices 140,000-160,000 Yuan Cheaper Than Market Expected... Complaints Over Tesla's Pricing Policy
Tesla's Market Dominance in China Likely to Grow Further

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Whenever an article about the American electric vehicle Tesla is published, a heated debate always erupts among Chinese netizens. This reflects both the high interest in Tesla electric cars and a sense of caution toward American-made electric vehicles. This time, the controversy is about pricing.

Tesla announced that it will sell the electric sport utility vehicle (SUV) 'Model Y' produced at its Shanghai factory and revealed the price on its website.

[Image source=Reuters Yonhap News]

The price of the Model Y Long Range version, which will officially go on sale this month, is 339,900 yuan (approximately 56.68 million KRW). This is 148,100 yuan cheaper than the price initially expected by the market. This all-wheel-drive model can travel up to 590 km on a single charge, and its zero-to-60 mph acceleration time is reported to be 5.1 seconds. Among Chinese netizens, after the Model Y price was disclosed, there was even a false rumor that pre-orders had exceeded 100,000 units.

The high-performance version of the Model Y, expected to be sold in the third quarter, is also priced at 369,900 yuan, which is 165,100 yuan (about 27.6 million KRW) cheaper than market expectations.

Tesla explained that the lower-than-expected price is due to the development of the Model Y based on the existing Model 3 platform, which reduced research and development (R&D) costs, and that up to 75% of parts can be shared.

Some analysts suggest that Tesla set aggressive prices targeting Chinese electric vehicle companies. It is said that the prices were matched to those of Nio (Weilai), known as the Chinese Tesla, whose main models EC6 and ES6 are priced at 368,000 yuan and 358,000 yuan, respectively.

The Global Times reported that after the Tesla Model Y price was revealed, a debate broke out on Weibo (the Chinese version of Twitter). There were claims that the pricing policy was favorable, while others argued that Tesla's price offensive would further fuel competition in China's electric vehicle industry.

Complaints about Tesla's price cuts were also raised. Consumers expressed dissatisfaction that Tesla's price reductions on new cars lowered the residual value of used cars.

In fact, Tesla reduced the price of the 'Model 3' by 8 to 10% this year. The price cut was attributed to the use of Chinese-made batteries, which lowered costs.

Model 3 owners complained that the new car they purchased for 355,800 yuan dropped in price by as much as 100,000 yuan within just one year.

Despite Chinese consumers' dissatisfaction, there are forecasts that Tesla's pricing policy will remain flexible going forward. Tesla's Model 3 production (supply) capacity is said to be unable to keep up with sales. This indicates that the Chinese electric vehicle market is supplier (Tesla)-centric.

In fact, Tesla's U.S. headquarters announced that it sold a total of 499,550 electric vehicles last year. This figure is almost identical to the target initially set by Tesla. It is estimated that about 140,000 of these were sold locally in China.