Every reporter: Li Xing every editor: Pei Jianru
“Tesla’s price cut was too aggressive this time, so I quickly took leave to take my family to see the car and test drive. There are many family members, and we have always been more optimistic about the household Model Y.” On October 26, a Tesla in Beijing Pulling the experience center, Lu Yu (pseudonym) told the “Daily Economic News” reporter.
On October 24, Tesla officially announced that from now on, Tesla will reduce the price of all Model Y and Model 3 series sold in mainland China by up to 37,000 yuan.
The reporter checked Tesla China’s official website and found that the Model 3 rear-drive version has dropped from 279,900 yuan to 265,900 yuan; the high-performance version has dropped from 367,900 yuan to 349,900 yuan; the Model Y rear-drive version has dropped from 316,900 yuan. to 288,900 yuan; the price of the long-range version has been reduced by 37,000 yuan from 394,900 yuan to 357,900 yuan; the price of the high-performance version has been reduced by 20,000 yuan from 417,900 yuan to 397,900 yuan.
Image source: Tesla official micro
“Buying a Tesla now is considered to be catching up. Book now, you can pick up the car before the end of the year at the latest, and you can catch up with the last wave of benefits before the new energy vehicle subsidy is cancelled.” When the reporter visited Tesla’s offline store, A Tesla store employee told reporters.
Some people believe that Tesla’s price cuts may lead to a “price reduction” in the domestic new energy vehicle market. In this regard, Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, believes that it is unlikely that domestic car companies will follow suit.
“Large-scale sales dilute the cost, which is the confidence for Tesla to dare to cut prices sharply, but for most domestic new energy car companies, both the scale of production and sales and the current high prices of power battery raw materials have limited their prices. There is room for downward adjustment.” Yan Jinghui told reporters.
Price cut as impulse?
The reporter visited a number of Tesla experience centers and found that there are many consumers who come to see and buy cars, and many stores are full of lively scenes. After this round of price cuts, the rear-wheel drive version of the Tesla Model Y has returned to less than 300,000 yuan. This also means that car owners who buy this model at this time can enjoy the national new energy vehicle subsidy of over 11,000 yuan in 2022, which can save 28,000 yuan compared to before the price cut.
“If you order a car now, you can pick up the car at the latest, and then it will be delivered in 2023. If you miss this opportunity, you won’t be able to get the new energy vehicle subsidy given by the state,” the above-mentioned staff of a Tesla experience center in Beijing told reporters say.
Tesla China’s official website shows that the pre-delivery date of the two versions of the domestic Model 3 is 4 to 8 weeks, and the pre-delivery date of the domestic Model Y is 1 to 4 weeks.
Image source: Every photo by reporter Li Xing
Tesla did not give a clear explanation for the reason for the price cut. According to Cui Dongshu, secretary general of the National Passenger Vehicle Market Information Association, Tesla chose to cut prices at this time mainly because the current market demand is too weak, and its order volume in October is not satisfactory.
In fact, in order to boost market demand, Tesla has been taking “disguised price cuts” since September. In September, Tesla China announced that new custom vehicles delivered from September 16 to September 30, unlicensed show cars or non-new domestically produced Model 3 and Model Y customers who have been damaged in transportation, if they choose If you buy Tesla in-store insurance, and the insurance types include compulsory traffic insurance and car damage insurance, you will receive an insurance subsidy of 8,000 yuan. The subsidy method is to directly reduce the car price by 8,000 yuan when the final payment is delivered.
However, this move did not achieve the expected effect of “surge in order volume”. Terminal data shows that in the first three weeks of October, Tesla’s store entry was very sluggish. “Tesla’s price reduction is mainly based on the completion of its annual target tasks, and it wants to quickly increase the number of orders.” Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, believes.
Tesla’s third-quarter 2022 financial report shows that in the third quarter of this year, its revenue and deliveries were lower than market expectations. Tesla CFO (ie chief financial officer) Zachary Kirkhorn admitted that the company’s full-year delivery growth rate this year is expected to be slightly less than 50%.
Price adjustment becomes “normal”
Raising prices, lowering prices, raising prices again, lowering prices again… Such price “operations” have become Tesla’s “normal”.
“Tesla has always adhered to the direct sales model and zero advertising strategy, with transparent and fair prices, and continued to make profits to consumers through rapid technological innovation and continuous optimization of services.” The relevant person in charge of Tesla told reporters.
According to statistics, this is Tesla’s first price cut after the “six consecutive rises” in the past year. Before the price cut, Tesla CEO Musk had already released a signal to the outside world. On Tesla’s second quarter earnings call in 2022, Musk once said: “After raising the price a few times, the price of Tesla’s cars has reached an embarrassing level, and Tesla may lower the sales at some point in the future. price.”
At the end of September this year, it was even reported that Tesla’s domestic models Model 3 and Model Y would undergo significant price cuts. Among them, the maximum price reduction of Model Y is expected to reach 40,000 yuan, and the starting price of the rear-wheel-drive version of Model Y may drop to 270,000 to 290,000 yuan. However, at that time, Tesla China refuted the rumor for the first time, and replied to the reporter: “(The sharp price reduction) is false information.”
Less than a month after the rumor was refuted, Tesla announced a price cut of nearly 40,000 yuan. “After realizing large-scale production and sales, Tesla’s overall production costs can be greatly reduced.” Yan Jinghui said that cost dilution is the basis for Tesla to dare to cut prices significantly.
According to official data, as of the third quarter of 2022, Tesla’s global cumulative delivery has exceeded 3 million. Among them, from January to September 2022, Tesla’s global cumulative production is about 930,000 vehicles. “Tesla will produce more than 1.5 million cars this year,” Musk said in April.
However, after the price cut came controversy and rights protection. Many old car owners have expressed their dissatisfaction with Tesla and demanded a compensation plan, and car owners went to Tesla’s offline stores to pull banners to collectively defend their rights. In this regard, the Tesla China customer service staff only replied to the reporter: “At present, the company has no compensation plan for customers who have reduced the price of the car.”
Expert: “price war” unlikely
“It is impossible to say that (Tesla’s price reduction) has no impact, but this impact will affect the entire domestic new energy vehicle market.” On October 27, a staff member of a Huawei authorized experience store in Beijing told reporters that the official price guide It is formulated in a unified way, and the asking industry will not reduce the price because of Tesla’s price reduction.
However, a few days ago, it was reported that the M5 and M7 models of the Wenjie brand have begun to cut prices, and the final payment can be directly reduced by 8,000 yuan. In this regard, the above-mentioned staff said that at present, the company has formulated a corresponding preferential plan under the condition that the official guide price of these two cars remains unchanged, but it has not yet reached the store. As for whether the deduction will be made at the end of the payment, it is unclear.
Huawei also denied the rumored “price reduction of 8,000 yuan”, saying that “since the early morning of October 24, the original financial discounts, differentiated gifts for each sales store and other services have been cancelled, and some existing car models have been purchased by users. A unified insurance worth 8,000 yuan will be given away.”
The reporter checked the official website of Wenjie and found that from October 25th to October 31st, Wenjie launched a car purchase gift of 8,000 yuan worth of Huawei’s home refill installation service package for both of its two cars.
Image source: Wenjie official website
Yan Jinghui believes that Tesla’s current round of price cuts will have the biggest impact on the competing models of Model 3 and Model Y, and it intends to quickly seize the market segments in these two fields.
Judging from the pricing range of Model 3 and Model Y, in addition to asking the world, there are also competing companies such as “Weixiaoli”, BYD, Lantu, and Jihu who are “threatened”. Soochow Securities analyzed that after Tesla’s price reduction, new energy products in the price range of 200,000 to 400,000 yuan will be directly affected, and it will also affect fuel vehicles at the same price and models with a price of 100,000 to 200,000 yuan. A new round of industry price cuts or will appear.
However, Xu Haidong gave a different analysis result. “Tesla’s price reduction is indeed a huge impact on the domestic new energy vehicle market, further intensifying market competition. However, Tesla’s price reduction is a comprehensive consideration of its own development, annual sales target, profitability and other aspects. As a result, domestic self-owned brand new energy vehicle companies are not very likely to follow the price reduction when the price of raw materials for power batteries is still rising and the production and manufacturing costs remain high.” Xu Haidong said.
According to public data, in the third quarter of 2022, Tesla’s gross profit margin was as high as 27.9%. In contrast, Li Auto has the highest gross profit margin among “Weixiaoli”, whose gross profit margin was 21.8% in the second quarter of this year; Weilai Motors’ gross profit margin was 16.7%; and Xiaopeng Motors’ gross profit margin was 9.7%.
Yan Jinghui also believes that it is unlikely that Tesla’s current round of price cuts will set off a “price war” in China, but it can make the “price increase” caused by the rise in the price of power battery raw materials in the new energy vehicle market converge somewhat. “When domestic car companies cannot gain an advantage in price, they should strive to do better in terms of their own product capabilities and customer service capabilities, highlight their own advantages, and strive to increase user stickiness.” Yan Jinghui suggested.
When the reporter visited the market, he learned that as of now, Li Auto, Weilai, Lantu and other car companies have not yet made any price cuts. “Ideal is not the same as the target user group determined by Tesla’s models. Tesla’s price reduction does not affect the willingness of consumers to buy ideal cars in stores.” A staff member of an ideal car offline store in Beijing said.
Image source: Every photo by reporter Li Xing
He Xiaopeng, chairman of Xiaopeng Motors, believes that Tesla’s price reduction is just a marketing method. “We haven’t even held an internal conference call for the price reduction of friends and merchants. The price reduction is just their marketing method, and it must be a ‘double-edged sword’.” He Xiaopeng once said in his circle of friends.
Li Bin, chairman of Weilai, also said, “The pricing logic of Weilai and Tesla is different. The pricing logic of Tesla vehicles is to adjust the price according to the change in cost, and Weilai has already set the price at the beginning of the price. Factors such as cost changes and room for possible price reductions are taken into account.”
During Tesla’s third-quarter earnings call in 2022, Musk revealed that Tesla is developing a cheaper next-generation car platform. The cost of the next-generation new car will be half that of the Model 3, but the output may be higher than the current one. The sum of all products.
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