Tesla’s Model 3 and Model Y Undergo Price Drops of Up to $5,102 in China

On October 24, Tesla announced that from now on, the prices of its Model 3 and Model Y in China will be reduced. Specifically, the starting price of its Model 3 rear-wheel drive version has been set at 265,900 yuan ($36,663), down 12,000 yuan, while the starting price of its Model Y rear-wheel drive version is now 288,900 yuan with subsidies, down 28,000 yuan.

These are the low-end versions of the Model 3 and Model Y, which account for a relatively high sales volume. At the end of last year, under a new round of price increase, the starting price of the Model Y rear-wheel drive version was adjusted to about 302,000 yuan, exceeding the subsidy limit of 300,000 yuan in China. With this price reduction, buyers can enjoy the subsidy of 11,088 yuan again. Tesla also said that the subsidy for the purchase of new energy vehicles will be terminated on December 31, 2022, after which licensed vehicles will no longer enjoy subsidies.

The higher-priced versions of the Model 3 and Model Y also witnessed price reduction. The starting price of the performance version of the Model 3 is 349,900 yuan, down by 18,000 yuan, while that of the long-range version and performance version of the Model Y is 357,900 yuan and 397,900 yuan respectively, down by 37,000 yuan and 20,000 yuan.

The latest policy triggered complaints from previous consumers. Some said, “since the car was picked up on September 12, its price has been lowered by 36,000 yuan in a month and a half. I have no loyalty to Tesla at all,” and “I lost 30,000 yuan in three months due to repeated price drops.” So far, Tesla has not given an exact response to whether there is a compensation scheme for the car owners who have just picked up their cars.

After this round of reductions, the prices of Tesla’s mainstream models returned to the level of early March this year or even the end of last year, which will bring direct stimulation to sales. People close to the matter previously told 36Kr that Tesla’s orders in China have not met expectations since October, and many people in the industry expect Tesla to cut prices in the near future.

At its third-quarter financial report meeting held last week, Tesla CEO Elon Musk warned that there will be certain challenges for supply chains and logistics in the fourth quarter this year, and that Tesla vehicles are still in high demand.

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Compared with the previous selling price, Tesla models still have a lot of room for price adjustment. For example, the lowest prices of the rear-wheel drive version Model 3 and Model Y last year were 235,900 yuan and 276,000 yuan respectively, and the latest prices are still 30,000 yuan and 12,900 yuan higher.

Failure to adjust the price to the previous level is due to the high cost of core components such as batteries. Taking lithium carbonate, the main raw material of power batteries, as an example, according to data released by a nonferrous metals information website in Shanghai, battery-grade lithium carbonate rose by 3,000 yuan per ton to 538,000 yuan per ton on October 21.