On Wednesday Tesla decreased the cost of its Model S and Model X vehicles already in stock in China, as part of an effort to increase sales in one of its key markets. The Model X can now be purchased for a price of 836,900 Chinese yuan ($114,677), reduced from 898,900 yuan, according to a post on the Chinese microblogging service Weibo. Additionally, the Model S is available for a cost of 754,900 yuan, a decrease from its previous price of 808,900 yuan.
Tesla this week dropped the cost of their Model S and Model X cars in China, in an effort to increase sales as competition in the area rises. The price for the Model X falls from 898,900 Chinese yuan ($114,677) to 836,900 yuan, and the Model S from 808,900 yuan to 754,900 yuan. Price cuts were also applied to the Model Y and Model 3, available in the U.S.
Tesla has opted to lower their profit margins to further their market presence, which was evident in their June quarter earnings with their lowest operating margin of 9.6% in the past five quarters. This has caused concern amongst investors for further triggers of a price war in the Chinese market, and has caused a dip in shares for Tesla as well as other Chinese electric vehicle companies such as Xpeng, Nio, and Li Auto.
The flux in pricing could be attributed to the weakened demand in the Chinese economy due to recent Covid-19 restrictions, and Tesla's CEO, Michael Dunne, believes that the best way to win China's market is through sustainable aggressive prices. This could put immense pressure on companies like BYD, Nio, Li Auto, and Xpeng that could have their already razor thin margins significantly decrease.
As per the China Passenger Car Association, Tesla sold 64,285 electric vehicles in July, a 31% decrease from the previous month.
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