From April 21st, Tesla Motors has begun a comprehensive price reduction for all models in the Chinese market. Prior to this, Tesla had just announced a price increase of 5000 yuan for the Model Y. The news quickly surged to the top of Baidu’s hot search list.
According to the official Tesla China website, this price reduction affects all Tesla models including the Model 3, Y, S, and X.
The updated Model 3 is now priced at 231,900 yuan, a 5.7% decrease, while the long-range version is priced at 271,900 yuan, a 4.9% decrease. The Model Y is now priced at 249,900 yuan, the long-range version at 290,900 yuan, and the high-performance version at 354,900 yuan. The Model S is priced at 684,900 yuan, and the Model S PLAID version is priced at 814,900 yuan. The Model X is priced at 724,900 yuan, and the Model X PLAID version is priced at 824,900 yuan.
Just at the beginning of this month, amidst Chinese automotive brands announcing price reductions, Tesla China had increased prices, specifically by raising the domestic Model Y price by 5000 yuan. Furthermore, the previous 8,000 yuan on-the-spot insurance subsidy policy and the up to 10,000 yuan paint exemption policy were set to expire on March 31st. Taking these into account, including insurance subsidies, the actual increase for the Model Y this time amounted to as much as 23,000 yuan.
Less than a month after the price increase, Tesla announced a price reduction. Analysts suggest that behind this price reduction lies the pressure Tesla faces for increased sales volume and the intensifying global competition in the new energy vehicle market.
It’s not just Tesla in China reducing prices. On April 19th, Tesla announced price reductions of $2,000 each for its Model Y, Model X, and Model S cars in the United States.
Moreover, on April 5th, Tesla announced a global workforce reduction of 14,000 employees, which is over 10% of its total workforce.
According to sources familiar with the matter in mainland China, the percentage of workforce reductions at Tesla in China significantly exceeds 10%. Some departments will see reductions between 30% to 40%, with individual departments experiencing a 50% reduction, while other departments generally hover around 20%. Severance packages range from N+1 to N+3, meaning employees could potentially receive severance up to three months’ worth of salary upon departure.
Industry insiders speculate that Tesla’s workforce reduction this time may be related to market demand adjustments, capacity optimization, and other factors.
According to Tesla’s first-quarter 2024 sales volume data, the company reported a global delivery of 386,800 vehicles, an 8.5% year-on-year decrease, and a 20.2% quarter-on-quarter decline compared to the fourth quarter of last year, hitting a new low in the past five quarters. This also marks the first time Tesla’s quarterly sales volume has dropped below the 400,000 mark since the third quarter of 2022.
Since March this year, various Chinese car companies have engaged in comprehensive price reductions, igniting a price war that has put some pressure on Tesla’s sales. This may be one of the reasons behind Tesla’s decision to reduce prices.
Chinese commentators suggest that Tesla’s comprehensive price reduction may once again trigger a new round of price wars among Chinese car manufacturers.