Amidst the strong emergence of electric vehicles in China, the global competition in the electric vehicle market intensifies. Tesla’s website displayed on Friday (19th) that it would be reducing the prices of its Model Y, Model X, and Model S cars in the U.S. by around $2,000.
The website indicates that Tesla has lowered the price of the base model of Model Y from $44,990 to $42,990, while the Long Range version is now priced at $47,990, and the Performance version at $51,490.
The price of Model S has been reduced to $72,990, with the Model S Plaid now priced at $87,990. The basic price of Model X has decreased to $77,990, and the Model X Plaid is now priced at $92,990.
Tesla (TSLA-US) dropped by 1.92% to $147.05 per share on Friday (19th), with a continued decline in after-hours trading. While past price reductions typically boosted Tesla’s stock price, this strategy seems to have lost its effectiveness lately, with the stock down 40.81% year-to-date.
The intense competition from China undoubtedly poses a serious threat to Tesla, as BYD surpasses it in terms of price, profit margin, market share, and value. In response to this, Tesla has been taking frequent actions. Recently, Tesla lowered the subscription price for Full Self-Driving (FSD) and later announced significant job cuts.
Elon Musk announced on social media platform Clubhouse on the previous Friday (12th) that the subscription fee for Full Self-Driving (FSD) software in the U.S. and Canada has been reduced from $199 per month to $99 per month. This marked the first time Tesla cut prices by 50%, aiming to increase adoption rates of its advanced driving assistance system before the first-quarter earnings report.
Additionally, Tesla announced a global layoff of over 14,000 employees, exceeding 10% of the total workforce on April 14th.
On April 8th, Musk openly stated that not only in the electric vehicle sector but also in the entire automotive industry, China poses a threat. He mentioned that competition from Chinese automakers affects the entire automotive industry, not just in electric vehicles but across all automotive sectors.
In fact, besides Tesla, numerous European car manufacturers have accelerated the development of their products, platforms, and smart technologies since the Shanghai Auto Show in April. They fear that their success in the Chinese market may not be sustainable and could threaten their European and global market positions.
China has now become the world’s second-largest car exporter, with data indicating that Chinese car exports exceeded 3 million vehicles in 2022. In 2022, 16% of electric cars sold in Europe were imported from China.
Looking ahead to significant events next week, Tesla will announce its latest quarterly earnings on Tuesday (23rd). Market expectations are for Tesla to report first-quarter revenue of $22.521 billion, a 3.46% decrease year-on-year, and earnings per share of $0.44, a 39.48% decrease year-on-year.