Aims to boost sales of imported cars as Shanghai plant proceeds
Tesla's latest price cut for its Model 3 cars further reduces the gap between its imported Model 3s and those to be made in China, which one expert said is meant to boost sales of the imported version while paving the way for further price cuts on cars made in China.
Tesla rolled out the price cut as it mounts efforts to speed up the construction of its Gigafactory 3 located in suburban Shanghai.
According to a report of thepaper.cn on Wednesday, the Gigafactory 3's construction speed exceeds expectations and the facility will be able to put cars onto the market by the end of this year.
On Tuesday, Tesla implemented across-the-board price cuts. It reduced the price of the Model 3 standard range plus rear-wheel drive model from 377,000 yuan ($54,800) to 355,900 yuan. The price of the made-in-China version remained unchanged at 328,000 yuan.
Tesla also cut price on some of Model S and Model X cars.
Wang Hao, Tesla China's general manager, said that after the reduction, the prices of imported and made-in-China Model 3s would be almost the same. "Tesla wants to let Chinese consumers join the league of electric car users at a faster speed," he was quoted by thepaper.cn as saying during a press conference on Wednesday.
"Now many Chinese customers are postponing their buying plans to wait for the cheaper made-in-China Model 3s to come out, as most Model 3 buyers in China are still sensitive to price," Feng Shiming, a veteran car industry analyst, told the Global Times on Thursday.
"Tesla wants to cut this waiting period by methods such as speeding up construction of its Shanghai plant and reducing the price gap between cars made at China and abroad," he said.
The recent price cuts for Model 3s should also "pave the way" for later price cuts of made-in-China cars, he said. "It's generally believed by domestic customers that 328,000 yuan is too high," Feng said.
A salesperson at Tesla told the Global Times on condition of anonymity on Thursday that the price of the made-in-China Model 3s will fluctuate, in keeping to manufacturing costs of the Shanghai plant and the yuan's exchange rate against the U.S. dollar.
Tesla's Global Vice President Tao Lin was quoted by thepaper.cn as saying that the current price of the made-in-China Model 3 has taken into consideration factors such as the Shanghai plant's operation status "in the very long term."
But price-based strategies are sparking some backlash among domestic customers. Feng said that some of his friends have "cancelled orders quickly" because of such price changes. One Tesla buyer commented on Thursday to the Global Times that Tesla is "playing" with its car pricing.
Tesla has made price cuts five times since last July, according to media reports.
Meanwhile, the carmaker is also speeding up construction of the Shanghai plant to accelerate sales of its cars in China.
Feng said that Tesla needs to display the power of the Chinese market to boost shareholders' confidence. "Also, competition has been increasingly fierce in China's new energy car market, which is pushing the U.S. carmaker to start selling as soon as possible," he said.
But Feng expressed concern about whether Tesla can maintain quality while it rushes to turn out made-in-China cars. "I've rarely heard a car manufacturer who can complete assembly line construction within one year. Usually it takes 18 months to three years for that process," he said.
The paper.cn cited Tao Lin as saying that the Shanghai plant's team has already taken shape and will expand further.
