- It just got 95% cheaper to “reserve” a Tesla vehicle in China.
- The electric carmaker already cut prices on its Chinese-made Model 3 to qualify for government subsidies.
- Demand for Tesla’s cars may not be as strong as previously thought, according to one analyst.
It’s just become a whole lot easier to pretend like you own a Tesla. If you live in China, that is.
The electric carmaker slashed the reservation fee for its sedans and SUVs in China by a staggering 95%. New buyers must only pay a 1,000 yuan ($142.85) deposit, down from as much as 20,000 yuan ($2,857) previously.
There is one caveat. The deposit will no longer be refundable. So unlike before, placing a reservation on a vehicle you don’t actually intend to purchase is going to cost you.
A uniform reservation deposit applies to all cars sold by Tesla China. | Source: Tesla.cn Website
Trouble for Tesla in China?
The Chinese market has proved to be highly price-sensitive, though. The Elon Musk-led carmaker has already had to adjust its strategy on multiple occasions.
During June, Tesla China reported a 35% month-on-month increase in Model 3 sales.
Is Elon Musk underpricing to hit delivery targets?
Tesla’s price pressures in China could be even worse than most investors realize.
Just this week, rumors broke that the long-range Model 3 is listed for sale as cheap as $36,000.
Reports have emerged of Tesla aggressively discounting the Model 3 in China – possibly to hit delivery targets. | Source: @globaltimesnews/Twitter
The long-range version of the Model 3 sells for just under $47,000 in the U.S. when you exclude potential incentives and gas savings.
GLJ Research analyst Gordon Johnson believes Tesla is deliberately sacrificing its gross margins to hit delivery targets.
[O]ur opinion here is simple; TSLA engaged in a discounted fleet sale (the magnitude of which remains unknown – i.e., was it 5K cars, 10K car, or more/less) in June to hit [its] delivery numbers in China…
Still, investors seem unperturbed by the news. The stock is up by about 50% since late June. And it’s showing no signs of slowing down.
TSLA rallied more than 5% in after-market trading on Wednesday after a surprise second-quarter profit.
Last modified: July 22, 2020 9:37 PM UTC