Tesla Inc (NASDAQ:TSLA), has demonstrated that it is prepared to go to war in order to expand its presence in China. It has lowered prices to match local electric car manufacturers, while also making price cuts in Australia, Japan, and South Korea.
In the fourth quarter production update, the company highlighted the weak spots in its popular electric vehicle (EV), models in People’s Republic.
“The main concern for Tesla right now is that the demand story, especially from China, is showing heavy cracks at a time when EV competition is steadily growing domestically… and other fighting for a smaller piece with the Chinese consumer weakening,” said Dan Ives, Wedbush Securities long-time Tesla bull.
“China representing 40%+ of the global growth story Tesla has, this is a serious concern for the Street. This will likely result in greater price cuts in the coming months to stimulate demand.
Musk, the founder, and his team seem to have heeded Wall Street’s warnings by cutting down on the price of their vehicles.
According to Reuters, the latest price reduction, as well as a reduction of October and other incentives up to CNY10,000 ($1,542) for Chinese buyers, means that Tesla’s prices have dropped 13% to 24% since September.
The US EV manufacturer slashed Friday’s prices for all Model 3 and Model Y versions in China by between 6% to 13.5%. This also reduced prices in Japan, South Korea, and Australia that day.
These price reductions come just days after Tesla’s China-made vehicle deliveries hit their lowest point in five month in December. They also came after Beijing ended a subsidy program that helped to build the largest EV market in the world.