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INSIGHTS / THE BIG PICTURE

Chinese EV startups feel the heat as Tesla slashes prices, market subsidies ending

China · Apr 23, 2019 · By Wang Xiao'e

Tesla's recent price cuts and upcoming Shanghai plant for producing cheaper cars are increasing pressure on its Chinese rivals

Not all price cuts are welcomed by consumers.

In February, Tesla slashed prices on eight of its models in China by 8–29%, including on Models 3, S and X – a move that met with rage and protests. A group of Tesla owners even gathered at one of its stores, in Changsha, and put up a banner proclaiming: "Tesla’s willful price cuts violate consumers' legal rights.”

In China, where tariffs and taxes make owning a Tesla far more expensive than elsewhere, Tesla cars are a status symbol for the upper-middle class. No surprise, then, that these car owners are pained to see the value of their expensive cars plummet with the latest price cuts.

And Tesla owners aren’t the only disgruntled ones. Chinese EV makers – many of them in fact once inspired by Tesla – have also lost their price edge as a result. The ES8 model of NYSE-listed NIO, a major Tesla rival here, retails around RMB 448,000–456,000, little different from Tesla’s Model 3, now priced around RMB 412,000–522,000. 

“Tesla is the first choice for many Chinese consumers wanting a high-end electric car. The price cuts absolutely help attract more potential buyers who used to be deterred by its higher price tag,” said one Tesla owner.

NIO, also known as “China’s Tesla,” won’t be following suit though. Li Bin, its CEO and founder said: “We will not slash prices to get a larger market share, but will win consumers with our quality service.” 

Edited by Bernice Tang

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