Is Tesla Going to Cut Prices Another 15% in China?
With the recent price cuts Tesla did in China, many are wondering if Tesla is going to have to cut its prices more in order to sell more vehicles.
Could Tesla reduce prices another 15% in China? Well, since the beginning of 2021, all of Tesla's prices are up about 5%. If this rumor were true, that would mean an about 10% decrease since the beginning of 2021. Prices for the same vehicle are about 25% cheaper than the U.S. models.
An additional 15% price cut would make those vehicles about 40% cheaper. I wouldn't be surprised if there are further price cuts in China. There is a dip in the global economy and Tesla and other auto makers are going to have decreased margins.
Tesla's auto gross margins could go to about 25% in 2023, if the global economy does indeed enter a recession. Tesla and Elon Musk will continue to innovate and improve manufacturing and other companies will still have the same issue. Tesla won't be the only company affected.
The Future of Tesla and EV Prices
I think it's possible Tesla will lower prices again in China, but I don't see it being 15%. Tesla makes a premium, luxury electric vehicle and they continue to sell every car they make. Only if there is a really bad recession could I see Tesla reducing prices by that much, but I think we aren't going to get much worse than we already are right now.
I think the better thing to pay attention to is if Tesla will lower prices outside of China. China will be a smaller and smaller market over time as Tesla expands in Europe and the U.S. and other countries.
I don't see Tesla lowering their prices in the U.S. or Europe any time soon. There is still wait times for their vehicles and as long as their is wait times, Tesla won't lower their prices. In fact, with the upcoming inflation reduction act, Tesla may be forced to raise its prices as more people can now afford to buy Tesla vehicles.
Right now, it seems like Tesla lowering prices in China will have a dramatic effect and it will have an effect. But as the years go on, I see this being not as important as Tesla now has sales happening all over the world and builds more giga factories though out the world.
Do you think Tesla will lower prices by 15% in China? If so, when?
For more information, see this video by Electrified:
Leave your comments below, share the article with friends and tweet it out to your followers.
Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.