Tesla delivers on its promises, lowering prices when sales are slow | Insights from Dolphin Research
Tesla has lowered its prices again, putting pressure on domestic brands this time.
Not only is it reducing prices, but it's also on the road to further price reductions. After a sales slump in July, Tesla has once again lowered its prices.
During Tesla's Q2 earnings conference, it was mentioned that if the economic environment continues to deteriorate, Tesla will continue to lower car prices to ensure sales.
So far, Tesla has indeed kept its word.
On August 14th, Tesla announced that the Long Range and Performance versions of the Tesla Model 3 would be reduced by 14,000 yuan, a decrease of 4%. The Long Range version has dropped below the 300,000 yuan mark for the first time, coming in at 299,900 yuan. Although Tesla did not directly provide a price reduction, it offered an 8,000 yuan insurance subsidy, effectively reducing the price by 3.5%.
1. Tesla's second price reduction in the second half of the year
This price reduction by Tesla is the second one in the second half of this year and the seventh direct or indirect price reduction since September last year.
Compared to the previous price reduction, although the difference in magnitude is not significant, the subsequent impact is quite different.
The previous price reduction by Tesla mainly targeted its high-end models, Tesla and Tesla, offering discounts of 35,000 to 45,000 yuan.
Since the price range of these two Tesla models is around 750,000 to 850,000 yuan, there are not many competitors, mainly including GAC's HiPhi X and Porsche's Taycan. Therefore, the impact was not significant, and there was no price reduction from other new energy vehicle companies.
However, this time Tesla's price reduction targets its main sales models, Tesla and Tesla. The price range of these two main models, 200,000 to 300,000 yuan, is exactly the main market range that domestic new energy vehicle companies are competing for. Domestic new energy vehicle companies will face price pressure once again.
At the beginning of the year, Tesla's price reduction that broke the new low for Tesla and Tesla prices forced companies like WM Motor, XPeng, and NIO to lower their prices to protect their market share. Even so, the sales of some leading new carmakers were dismal throughout the first half of the year, and it wasn't until July that sales showed signs of recovery.
It is worth noting that before Tesla's price reduction, some new energy vehicle companies such as Leapmotor (up to 20,000 yuan price reduction), Xpeng (price reduction range of 30,000 to 37,000 yuan), and Chery New Energy (up to 10,000 yuan price reduction) had already taken the initiative to reduce prices to maintain sales volume at the beginning of August.
Faced with the pressure of sales and the impact of Tesla, the price butcher, once again making a powerful price reduction, it is expected that more new energy brands will join this wave of price reduction.
2. Tesla's "Sales First" Strategy Continues
Over the past three years, Tesla, as the global leader in the new energy vehicle industry, has maintained a gross profit margin of no less than 20%. However, this year, it has hit a new low for two consecutive quarters, with a gross profit margin of only 18.2% in the second quarter, and is even being caught up by emerging competitor NIO.
Despite the profit margin decline in the first half of this year, Tesla, which experienced a significant increase in sales during this period, is not planning to change its "sales first" strategy.
In July of this year, while the overall Chinese auto market was exceptionally hot, Tesla faced a sharp decline in sales, with only 64,000 units sold, a significant decrease of 31.4% compared to the previous month, reaching the lowest level for the whole year.
Although the trigger for the sales decline was the upgrade and transformation of Tesla's Shanghai Gigafactory production line in preparation for the launch of the updated models, when faced with consumers who were already tired of the old models, Tesla's only remaining card to play was to lower prices.
Unable to continue attracting consumers through performance and features, the only option left was to offer discounts to consumers.
This round of price reductions by Tesla not only stabilizes its market share by giving benefits to consumers before the launch of the updated models, but also effectively clears the inventory of old Tesla models.
After all, with the increase in production capacity of Tesla's four major factories, Tesla's current production has exceeded sales by a large margin. In the first half of this year alone, Tesla's inventory reached 22,500 units.
In August, the price reductions by various new energy vehicle companies not only revealed the fierce competition in the new energy vehicle market, but also demonstrated the irrationality of the commitment made by car companies in July to maintain fair competition in the market. Ultimately, the market should be left to the market.
Faced with Tesla's determination to lower prices and maintain sales volume, domestic new energy vehicle companies need to truly face this industry reshuffle. It is not enough to rely solely on collaboration.
Instead of hoping for mercy from their competitors and refusing to lower prices, it is better to effectively reduce their own product costs, strive to improve their brand influence, and ultimately face the competition with confidence. Especially since domestic car companies have already set their sights on overseas markets, engaging in a reasonable price war will help accelerate the clearance of the overcrowded new energy vehicle market and eliminate inefficient companies.
It is believed that after this battle, domestic new energy vehicle companies will continue to stand out in the competition in overseas new energy vehicle markets.