Tesla introduced fresh incentives on Friday, including insurance subsidies, to attract consumers in the largest auto market globally. In this extended price battle against established competitors like China’s BYD, the U.S. electric vehicle giant aims to strengthen its position. According to Tesla’s Weibo post, buyers acquiring current stocks of the rear-wheel-drive Model 3 sedan and the recently released Model Y SUV before the end of March could receive incentives totaling up to 34,600 yuan ($4,807.76).
The company also resumed its owner referral program for the Chinese market and a limited-time preferential financing plan that can save buyers up to 16,600 yuan ($2,517.62). The incentive package and a price cut mark the latest salvo in Tesla’s battle for sales in China, where it lost its No. 1 position to local EV heavyweight BYD in 2022.
But while Tesla’s initial rounds of price cuts jolted the industry, Morgan Stanley analysts say further adjustments haven’t done much to stimulate demand in China. Further cuts may even backfire if they cause customers to feel duped by the reversal and request refunds, they said.
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In other developments on the Chinese front, Tesla recently rolled out a revamped version of its Model 3, offering a 9% longer range and other refinements. However, the updated car hasn’t received regulatory approval in China yet, which is a crucial hurdle before it can hit the market.
Tesla’s move follows a similar strategy by BYD, which announced it was offering cash discounts for its new Song Pro hybrid SUV in China, lowering the starting price by 15.4%. It’s an attempt to attract brand converts as the Chinese EV market continues to slow. Other local manufacturers have been cutting prices to compete, but their efforts so far appear to have mixed results. In the United States, for example, Tesla’s price cuts triggered protests by some recent owners, who demanded free trials of the company’s Full Self-Driving software or other incentives to make up for missing out on the reduced costs.
