Did the Drastic 20 Million Won Price Cut Work? Tesla's Sales Soar in China

August Sales Increased by 31% Compared to Previous Month
Dissatisfaction Among Existing Buyers

American electric vehicle company Tesla has succeeded in reversing its sales decline by implementing significant price cuts in China, according to analyses.

According to Tesla specialized media TESLARATI and others, the China Passenger Car Association (CPCA) recently reported that Tesla's sales volume in August reached 84,159 units, a 30.92% increase compared to the previous month. Tesla's sales volume in China in July was 64,285 units.

The reason Tesla captured the hearts of Chinese consumers is attributed to its aggressive price reduction policy. In fact, on the 16th of last month, Tesla lowered the selling prices of the Model S and Model X to 754,900 yuan (approximately 137 million KRW) and 836,900 yuan (approximately 152 million KRW), respectively. Two days earlier, on the 14th of last month, the prices of the 'Model Y Long Range' and 'Model Y Performance' were reduced by 14,000 yuan (approximately 2.55 million KRW) each.

Elon Musk. [Photo by AP Yonhap News]

At that time, Chinese media reported, "Tesla caused a direct shock to the automotive industry by consecutively adjusting prices from August, lowering the selling prices of the Model S and Model X by 110,000 yuan (approximately 20 million KRW) and 160,000 yuan (29 million KRW), respectively," and predicted that price discount competition in the Chinese automotive market would reignite. Tesla had also reduced the selling prices of the Model 3 and Model Y in China by 6 to 13.5% in January.

However, existing vehicle buyers in China have expressed dissatisfaction with Tesla's repeated price cuts. Some existing buyers issued a statement saying, "We ordered with expectations and trust in Tesla and waited 1 to 2 years to purchase the car," and claimed, "We suffered significant financial losses due to the large price reductions, and Tesla is responsible for compensating us."

Meanwhile, Elon Musk, Tesla's Chief Executive Officer (CEO), appears largely unconcerned about the profitability deterioration caused by the price cuts. After the second-quarter earnings announcement last month, he emphasized during a conference call that "even if margins are pressured, there is a possibility of further price reductions."