Billionaire Elon Musk’s Tesla has embarked on a strategy that has triggered a price war among the electric carmakers in the hyper-competitive Chinese market. The company has slashed prices of its cars, up to 50 per cent, that has forced other companies to take similar steps in order to stay competitive. Tesla’s deep price cut even threatens to drive competitors out of the market.
Tesla’s gameplan came into force last October. Tesla, a dominant player in the Chinese market, manufactures its cars at its factory in Shanghai. The initial price cut in October was followed by another round which made Tesla’s locally manufactured cars 14 per cent cheaper than they were last year. In some cases, the cars were 50 per cent cheaper than their price in the US and Europe.
Tesla’s aggressive pricing strategy forced other carmakers to reduce prices of their models. Both, local and global brands have got drawn into the price war. These include Xpeng, Nio Volkswagen, Mercedes-Benz to name a few.
Mercedes Benz has offered a discount of up to 70,000 yuan (USD 10,000). Ford Motor Company has brought down the price of its Mach-E electric sport utility vehicle to 209,000 yuan. This makes it cheaper by about a third than it is in the US.
“Tesla created havoc for the rest of the market,” said Jochen Siebert, managing director of JSC Automotive, a consultancy with offices in Shanghai and Stuttgart.
Siebert was quoted by Bloomberg in its report over the situation.
(With inputs from agencies)
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