(Bloomberg) — Tesla Inc. shares are poised to extend their slump after the carmaker made another round of price cuts in China’s increasingly competitive electric vehicle market.
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The starting price for Tesla’s locally built Model Y sport utility vehicle has dropped to a new low of 259,900 yuan ($37,875) from 288,900 yuan, according to the company’s China website. That standard-range, rear-wheel drive version costs 43% less than the most basic Model Y available in the US, which has a longer range and is all-wheel drive. Friday’s price cut also lowers the Model 3 to 229,900 yuan from 265,900 yuan, about 30% cheaper than in the US.
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Tesla already cut prices in October, with China’s mass market and premium EV segments becoming increasingly crowded by the likes of domestic players BYD Co., Xpeng Inc. and Nio Inc., as well as international stalwarts Porsche AG and Mercedes Benz Group AG. Signs of deteriorating prospects in the market and Chief Executive Officer Elon Musk’s preoccupation with Twitter Inc. contributed to Tesla’s stock plunging 37% in December and 65% in 2022, its worst monthly and yearly performance.
The shares dropped as much as 6.4% to $103.25 before the start of regular trading Friday.
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Tesla said its newly introduced Model S, with a redesigned interior, will be priced at 789,900 yuan in China, while the Plaid version — Tesla’s fastest car, taking 2.1 seconds to go from zero to 100 kilometers (62 miles) per hour — will be sold from 1.01 million yuan. The Model X SUV is priced from 879,900 yuan, and the Model X Plaid starts at 1.04 million yuan. Deliveries will begin in the second quarter.
The Austin, Texas-based company is a dominant player in China’s mass market of EVs that cost no more than 300,000 yuan. Tesla localized production of Model 3 sedans at the end of 2019 when it opened a factory in Shanghai capable of churning out 450,000 cars a year. It started shipping Model Ys from there in January 2021.
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Tesla shipped over 710,000 vehicles from Shanghai in 2022, representing about 54% of its worldwide sales. Deliveries slowed to about 56,000 in December, almost half the November number, as production was suspended due to equipment upgrades and lackluster demand. Earlier this week, Tesla announced that global deliveries were lower than expected for a third-straight quarter, prompting a 12% plunge in its share price Tuesday.
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The automaker also adjusted prices of its Model 3 and Model Y cars in Japan on Friday. The entry-level Model 3 was cut 10% to 5.4 million yen ($40,300), while the Model Y dropped 9.9% to 5.8 million yen.
