Tesla Lowers Prices Amid Intensifying Competition
Following its affordable models, Tesla has lowered the starting prices of its high-end Model S and Model X in the U.S. by $10,000 (approximately 13.4 million KRW). As the adoption of electric vehicles increases, this move is interpreted as the beginning of serious price competition, while Tesla's stock price is also showing a downward trend.
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According to Tesla's website on the 16th (local time), the Standard Range version of the Model S is being sold for $78,490 (approximately 105 million KRW). This is $10,000 less than the previous starting Model S version (about $88,490).
The Standard Range version of the Model X, a sport utility vehicle (SUV), is also priced at $88,490 (approximately 118.57 million KRW), which is $10,000 lower than the previous starting Model Y.
The maximum driving range has been shortened. The Model S's maximum range, originally 405 miles (about 652 km), has been reduced to 320 miles, and the Model X's range has decreased from 348 miles to 269 miles.
Tesla reportedly did not replace the battery or motor with different products. According to major foreign media, Tesla stated, "Both models are equipped with the same battery and motor as before, but the driving range and performance have been limited through software."
Tesla also lowered the price of the Model Y in China. On the 13th (local time), Tesla announced via China's Weibo that it would reduce the price of the Model Y crossover's Long-Range and Performance versions by 14,000 yuan (approximately $2,000).
There is analysis that Tesla's price reduction policy was influenced by the pricing strategies of other automakers in China. Just days after Chinese automaker Geely lowered the price of its electric vehicle brand Zeekr's crossover model Zeekr 001, Tesla announced its own price cut policy.
In China, the prices of the three versions of the Zeekr 001 have been reduced by an average of about $5,000, with the current base price ranging from $40,000 to $52,000. Zeekr sold about 50,500 battery electric vehicles from the beginning of this year through July. Although this accounts for only 2% of the entire Chinese market, it represents a roughly 127% increase compared to a year ago.
Critics point out that Tesla's continuous price-cutting policy is a double-edged sword. Although Tesla achieved record sales of about 466,000 units in the second quarter, its operating profit margin dropped to 9.6%. This is a 5 percentage point decrease compared to 14.6% in the second quarter of last year.
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