FX.co ★ Tesla Slashes Car Prices In China After US Cuts

Tesla Inc., the renowned luxury electric car manufacturer, has made significant price reductions on several of its models in China. This decision mirrors similar adjustments made in the United States and comes amidst a period of weaker demand and heightened competition.

At the start of trading on the Nasdaq Stock Exchange, Tesla shares were down 3.4 percent, priced at $142.05. In China, the company reduced the base price of the renovated Model 3 by 14,000 yuan, bringing it down to 231,900 yuan. Price reductions were also applied to the Model Y, Model S, Model S Plaid, and both the regular and plaid variants of the Model X.

Last Friday, the company reportedly dropped the prices of its Model Y, Model X, and Model S vehicles in the U.S. by $2,000. Additionally, over the weekend, Tesla slashed the price of its Full Self-Driving (FSD) driver assistant software from $12,000 to $8,000 in the U.S.

Tesla has recently faced difficulties due to dwindling demand and robust competition, both in the U.S., Europe, as well as one of its biggest markets - China. Earlier this month, the company reported weak production and delivery numbers for Q1, partly attributed to the initial phase of the production ramp of the updated Model 3 at Fremont factory. Production was also disrupted due to factory shutdowns which resulted from shipping diversions prompted by the Red Sea conflict and an arson attack at Gigafactory Berlin.

A report from Bloomberg in late March indicated that Tesla had reduced its electric vehicle production at the Giga Shanghai factory in China. The slowdown was attributed to a stagnation in sales of new-energy vehicles, increased competition, and price wars. Tesla consequently limited its production of EV parts.

Last week, Tesla announced plans to cut more than 10% of its global workforce as a result of the slowdown in the EV market. With around 140,000 employees globally in early 2024, it's projected that approximately 14,000 staff will be affected by this move.

In a memo, Elon Musk confirmed that role duplication and the need for cost reductions were the key motivators behind this decision. According to Musk, the planned job cuts will allow Tesla to remain lean and innovative and maintain its hunger for the next phase of growth.