Tesla has cut prices of all cars that the company has on offer in China, in an effort to woo buyers in the world’s largest new energy vehicle (NEV) market, according to market research firm Alpworks.
The cuts fall between RMB 113,000 (US$17,000) and RMB 341,100 (US$51,000), placing the new prices for Tesla vehicles from RMB 407,000 (US$60,800) to RMB 848,200 (US$12,700).
The EV maker earned US$1.07 billion from sales in China in 2018, dropping by 13.3% compared to revenue from one year earlier. Tesla’s weak performance in China ran contrary to its 82.5% year-on-year increase in global revenue to US$21.46 billion in 2018.
The Chinese government aims to put 5 million plug-in vehicles, including pure electric and hybrid cars, on the country’s roads by 2020. The country currently has the world’s largest NEV stocks, with cumulative sales of nearly 3 million units as of 2018.
Alpworks attributed Tesla’s underperforming business in China to its high prices, the trade war between China and the United States, and competition from domestic automakers.
BYD, China’s largest manufacturer of NEVs, sold over 28,000 new energy passenger vehicles in the first month of this year, nearly 58% of which were pure electric cars.
Another car company, NIO, which went public on the New York Stock Exchange in September last year, sold nearly 1,900 units of its ES8 SUV in January in China, surpassing Tesla’s total unit sales in the same period. NIO’s ES6 SUV, which is priced lower than Tesla’s Model 3 sedan, will be shipped to buyers in June.
He Xiaopeng, founder of the Alibaba-backed XP Motors, which sold 483 EVs in China in 2018, has offered his view that Tesla has been overestimated in China, adding that awareness of its brand has not been effectively translated into sales due to the American automaker’s unsuccessful localization strategy.
However, He added that Tesla’s Model 3 will shift potential Chinese car buyers’ attention away from gas-powered vehicles to EVs, creating a larger pie for all companies in the sector.