Tesla’s Stock Sinks After Cutting Prices on cars in China
Tesla has cut starting prices for its Model 3 and Model Y cars by as much as 9% in China, reversing a trend of increases across the industry amid signs of softening demand in the world’s largest auto market.
The price cuts, posted in listings on the electric vehicle giant’s China website on Monday, are the first by Tesla in China in 2022, and come after Tesla began offering limited incentives to buyers who opted for Tesla’s insurance last month.
Shares of Tesla (TSLA) fell nearly 4% in US premarket trading on the report about lower prices for its cars in China. Shares are down 40% so far this year through Friday’s close.
The price cuts come after Tesla CEO Elon Musk said last week that “a recession of sorts” was under way in China and Europe and Tesla said it would miss its vehicle delivery target this year.
Musk told analysts last week that demand was strong in the current quarter and said he expected Tesla to be “recession-resilient.”
China Merchants Bank International (CMBI) said Tesla’s price cuts underlined the growing competitive risk for EV makers in China, with industrywide sales projected to slow into 2023.
“The price cuts underscore the possible price war which we have been emphasizing since August,” said Shi Ji, an analyst with CMBI.
Data on Monday showed retail sales in China grew 2.5% in September, below the expected 3.3% rise and less than half August’s 5.4% growth.
