[Asia Economy Beijing=Special Correspondent Kim Hyun-jung] Local media including China’s First Financial and Economic Daily reported on the 16th that orders for Tesla vehicles, whose prices have been significantly reduced in China, are surging.
According to the reports, orders for Tesla vehicles with recently lowered prices are increasing nationwide, with some cities seeing a 500% increase compared to December last year. First Financial and Economic Daily explained, "After visiting some stores or making inquiries by phone, it was confirmed that order volumes have significantly jumped mainly in second- and third-tier cities," adding, "The lowered prices have become attractive to consumers." Sun Xiaojun, founder of the car sales service site CarFans, cited data from their platform, saying, "Tesla showrooms are receiving an average of 110 to 130 orders," and "this is about a 450% increase compared to last weekend."
Among the 43 markets worldwide where Tesla has entered, the prices of Model 3 and Model Y are the lowest in mainland China. The price of the entry-level Model 3 has been reduced by 36,000 yuan (13.5%) to 229,900 yuan (approximately 42.23 million KRW), and the base version of Model Y is sold at 259,900 yuan, down 29,000 yuan (10%). This is the second price cut since the maximum 9.4% discount introduced on October 24 last year. First Financial and Economic Daily added, "Tesla has also lowered prices in markets such as the US, Germany, and Canada," noting, "In some regions and for some models, the discount rate reaches up to 20%."
Reports of strong Tesla sales in China are being published daily. Recently, there was a report that orders in China reached 30,000 units within three days after Tesla’s price cut. However, Tesla has not issued an official response to this. Conversely, protests broke out where vehicle owners who purchased cars before the price cut rushed to Tesla stores to complain. Especially in stores in southwestern Sichuan Province, Shanghai, Shenzhen, and Chengdu, customers criticized, saying, "The company should have provided more information before the sale."
On the other hand, local Chinese companies have decided to raise prices due to the withdrawal of government subsidies for new energy vehicles. BYD announced that from January 1 this year, their vehicle prices will increase by 2,000 to 6,000 yuan, and Chery New Energy also announced a slight price increase of around 3,000 yuan. A source from the Chinese automotive industry told First Financial and Economic Daily, "Tesla is competing on price based on enormous profits, but we (Chinese companies) do not have that capacity," adding, "Tesla’s moves will put more pressure on the industry."
Chui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), explained, "With the automotive market sluggish ahead of the Lunar New Year, it is meaningless for other companies to follow price competition," adding, "They will respond by launching new products in February and March and improving product competitiveness." He further predicted, "With the withdrawal of new energy vehicle subsidies and price fluctuations this year, competition in the industry will become even fiercer."
Tesla’s price cuts are also affecting the used car market in China. The Hong Kong South China Morning Post (SCMP) introduced remarks from a local used car dealership representative, saying, "Dealers who purchased used Tesla vehicles before the 6th have become the biggest victims of the new car price cuts."
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