Tesla has been facing some serious headwinds in selling its models in China. The price cuts should add to the allure of its models.
In a strategic decision, Tesla Inc stated, it is slashing the price of its Model S and Model X cars in China in order to boost their sales that potentially have been offset by a growing trade war between the United States and China.
Tesla’s CEO, Elon Musk, stated, prices of the two models will be cut by 12% to 26%.
The price cuts will make the cars more “affordable” in China – the world’s biggest auto market which is witnessing a boom in new-energy vehicles.
“We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China,” said Tesla.
The development marks a change of course from July 2018, when Tesla raised its prices in response to tariffs.
Last month, Tesla had warned it was facing serious issues in selling its cars in China due to the new tariffs; it also stated, these new tariffs would force it to accelerate its investment in its first overseas Gigafactory in Shanghai.
So far, China has showed no signs of backing down from its trade war with the U.S.
Last month, Tesla managed to secure a site for its Gigafactory thus enabling it to avoid steep import tariffs imposed by China.
Tesla has recently launched pre-sales of its new Model 3 car in China whose starting price would be $77,928.83 (540,000 yuan) for a dual motor all-wheel drive version, and 595,000 yuan for performance version.
In May, Tesla lowered prices on its models in China.
($1 = 6.9294 Chinese yuan)