On December 1, Tesla announced its recall of 142,277 Model 3s manufactured in China between December 27, 2020 and November 7, 2022, as well as 292,855 Model Ys manufactured between January 1, 2021 and November 11, 2022, according to the website of the country’s State Administration for Market Regulation.
The reason for the recall is that some of the affected vehicles’ clearance lamps might make errors when restarting from parking mode. The occasional failure of these lamps will reduce the visibility of the vehicle and increase the risk of vehicle collisions in extreme cases. Tesla will provide a free software upgrade for vehicles covered by the recall through OTA.
According to incomplete statistics compiled by Sina Tech, since late December last year, Tesla has carried out a total of five vehicle recalls in the Chinese market, involving about 402,815 EVs. Among them, the production time of some recalled models overlaps, and design software updates, seat belt problems, windows and taillights have been the main reasons for the recalls.
Tesla’s dominance is being eroded and it is losing market share in the US to rivals as they launch more affordable models, according to a report released on November 30 by research firm S&P Global Ratings. Tesla’s market share in China, its most important overseas market, has also shrunk.
In July, Tesla’s China wholesale volume was 28,000 vehicles, down 64.2% from the previous month. Sales in China fell to 8,461 units, down 1.9% from a year earlier. At that time, blame was attributed to upgrades conducted at the firm’s Shanghai Gigafactory, which accounts for a third of its global capacity. After the factory upgrade, Tesla’s sales increased, but its market share in China still showed signs of contraction. Industry insiders believe that various measures initiated by Chinese car companies have become one of the reasons for Tesla’s declining performance in China.
Faced with slowing demand and pressure to meet annual sales targets, Tesla has reduced its product prices. On October 24, Tesla dropped the price of its Model 3 and Model Y by 18,000 yuan ($2,545) and 37,000 yuan ($5,231), respectively. This is the first time the firm has cut prices in China this year, after implementing six consecutive price increases within a year.
Tesla is also hoping to respond to changes in the market by controlling costs and introducing lower-priced models. Reuters reported that Tesla is developing a revamped entry-level Model 3 to lower production costs and reduce internal components and complexity. The redesigned Model 3 is expected to go into production in the third quarter of next year at its factory in Shanghai. “Tesla will also develop a new, more affordable model that will cost half as much as Model 3 and Model Y,” company founder Elon Musk said during the third-quarter earnings call.