Analysts Say Tesla Price Cut in China, Not Sustainable For Its Long-Term Game

Analysts have stated that EV giant maker Tesla could win the price battle for its vehicles in China, following a slash in the price of its vehicles, however noting that such a strategy would not be sustainable for its long-term game.

Tesla’s massive price cuts in some of its vehicle models did stimulate sales in China, which jumped nearly 80 percent earlier this year, with deliveries of its vehicles up 18% from December.

Analysts reveal that Tesla’s profit margins put it in a position to take a price war with competitors in China and beyond. However, despite these price cuts in some of its vehicle models, they predict that Tesla will lag behind competitors in introducing new models, improving navigation systems, and adding Lux interior touches or whiter glove customer service to serve the developing range of consumer preferences for EVs.

Tesla is reportedly facing a major problem of a very limited product mix, unable to cater to consumers’ preferences. Secretary General of China passenger car association (CPCA) Cui Dongshu said, “Tesla is facing a serious problem of a very limited product mix. Its slowness to respond to Chinese consumers’ preferences has led to very passive positioning for Tesla to rely on few means such as price cuts to stay competitive.

Investors King understands that Tesla has quite several challengers in China, such as Nio, Xpeng, Li Auto, and warren buffet’s backed automaker BYD. Talking about the competitive landscape for Electric Vehicles in China, the company’s CEO Elon Musk earlier this year revealed that the team is fired up about the future and determined to dominate with its vehicle models.

According to China passenger car association, Tesla’s Model 3 was the fifth best-selling new energy vehicle car in China in 2022, while the Tesla Model Y was the second best-selling electric sports utility in China, behind a model from BYD.