Inspiration from Tesla's Frequent Price Reduction

On September 1st, just a few hours after Tesla China announced the official pre-sale of the new Model 3, Tesla in China made another price adjustment. According to Tesla's official website, the current price of the basic Model S sedan in China has been reduced by 14%, the entry-level Model X has been reduced by 18%, and the higher priced version has seen a greater price reduction. In addition to price discounts, Tesla also offers a range of car purchase benefits to benefit car owners. At the same time, not only in China, Tesla has also significantly lowered the prices of the Model S and X in the United States.

Tesla's pricing strategy has caused industry shock. Since 2013, Tesla's four popular models have undergone a total of 59 price changes. In the past two years, Tesla's model prices have continued to decline. What is particularly shocking is that in just one month of 2023, the model 3's price dropped from 261900 yuan to 229900 yuan.

This wave of price cuts has sparked an explosive growth in sales. The monthly sales of 21000 vehicles in March this year set a sales record for Tesla. This fully demonstrates that Tesla has effectively mobilized market demand through frequent price adjustments, successfully attracting more consumers to purchase its products.

Since entering 2023, Tesla has gone through multiple rounds of price reductions, lowering the starting price of the domestically produced Model 3 to 229900 yuan. Industry insiders have analyzed that Tesla's move is preparing for the launch of its upcoming new Model 3.

In addition to the Model 3, Tesla's price reduction strategy is also reflected in other best-selling car models. Facts have proven that Tesla's price reduction strategy is still effective, as sales have significantly increased. Therefore, Tesla wants to strike while the iron is hot and consolidate its market position. From the situation in the first half of this year, the Tesla Model Y and Model 3 have achieved great success, firmly ranking first and second in the global new energy vehicle market.

According to the financial report, Tesla's revenue in the second quarter of this year was 24.927 billion US dollars, a year-on-year increase of 47%, reaching a new high; The net profit was $2.703 billion, a year-on-year increase of 20%, higher than market expectations.

However, in terms of profitability, Tesla's overall gross profit margin in the second quarter was 18.2%, lower than the market expectation of 18.8%, a decrease of 1.1 percentage points from 19.3% in the first quarter of this year, and a decrease of 6.8 percentage points from 25% in the same period last year. Among them, Tesla's gross profit margin on sales was 17.5%, setting a new low in five years.

utomotive industry analyst Mei Songlin believes that Tesla's move has sounded the horn of price cuts in the second half of the year, echoing the significant price cuts in early 2023. In his view, the price war initiated by Tesla is to carry out the price reduction war to the end, in order to highlight its core competitiveness in cost control.

Tesla's series of continuous and aggressive price cuts have not only caused dissatisfaction among investors, calling it a "short-term anesthetic", but also will inevitably trigger a series of chain reactions in the market and sound an alarm for new energy vehicle companies around the world.

The significant price drop of several classic Tesla models also means that the price war in the automotive industry will continue. For example, there has been recent news that the MINI brand under BMW Group will launch promotional activities in September, with a maximum discount margin of over 40000 yuan. According to incomplete statistics, since August this year, more than 10 car companies such as NIO, Zero Run, and Nezha have announced price reductions, and a new round of price wars for new energy vehicles has begun.

For China's automotive industry, it is currently in a leading position in many fields of new energy. However, if one blindly immerses oneself in the achievements made now and lacks thinking and innovation, it will inevitably fall behind the world again and lose some of its current advantageous positions. We must clarify our own direction and positioning, invest heavily in research and development, be committed to scientific research and innovation, and launch more cost-effective products. At the same time, it is also necessary to keep up with market demand and meet consumers' various expectations for new energy vehicles in order to better respond to various external challenges and promote the development of the world automotive industry.