The electric car market in China is getting hotter and hotter, and more and more competitive. The big dog in the market is BYD, while Tesla’s Model Y and Model 3 are routinely at the top of the model sales chart. Searching for more sales, BYD and Tesla cut prices at least a few times in 2023, and it looks like that trend is continuing in 2024. Both BYD and Tesla are engaging in price cuts and consumer incentives yet again this week.
Tesla just unleashed insurance incentives in China today, among others. “Customers picking up existing inventories of Model 3 sedans and Model Y SUVs by the end of March would be entitled to a maximum of 34,600 yuan worth of incentives, Tesla said in a post on its Weibo account,”That’s a lot in China, where Tesla’s prices were already at their lowest level. But that’s apparently the price of moving high volumes and keeping a good position in the biggest EV market in the world .
“Among the incentives are a 8,000 yuan discount in car insurance products with partnerships with Tesla, and a 10,000 yuan discount if the buyer chooses a change of paint. Tesla also offers limited-time preferential financing plans that could save up to 16,600 yuan for purchases of Model Y.” Those are discounts of $1,126 on insurance, $1,407 on paint, and $2,336 on financing for those in the US who think much better in US dollars., was first to make such moves.
All of this price cutting can come from lower supply chain costs and/or lower operational costs, but more likely than not , both of these companies will take a hit on their gross margin as the cost of keeping sales volumes up.
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