Tesla China initiates acceptance of orders for an extended-range Model 3 electric vehicle, accompanied by a 14% price increase.
In the dynamic world of electric vehicles (EVs), Tesla is experiencing a setback in its deliveries in China. The company has announced that customers can place orders for the new Tesla electric vehicle from next Tuesday, with deliveries slated to begin next month. However, recent data shows a decline in Tesla's deliveries, particularly for the Model 3 and Model Y vehicles.
According to the China Passenger Car Association (CPCA), Tesla's deliveries in July 2022 decreased by 8.4% compared to the same month last year. This decline is also evident when compared to June 2022, with a drop of 5.2%. This marks the first year-over-year decline since the Shanghai Gigafactory began production in late 2019.
The reasons behind this decrease are multifaceted. One significant factor is the rising competition in the Chinese EV market. Domestic EV makers such as BYD and Xiaomi are aggressively expanding and capturing market share. Xiaomi's new EV model, priced about 10,000 yuan lower than Tesla's Model Y, is gaining traction and competing on price outside Tesla's segment.
Another factor is the slowing demand for EVs in China. After rapid growth in prior years, the overall EV sales in China show cooling momentum. Tesla's July sales were down 33.9% from June and 12% year-on-year for all models combined, indicating less immediate buyer demand.
Tesla is responding to these challenges by expanding its lineup. The company has announced a new electric vehicle with a driving range of 830km. Additionally, Tesla China claims that the new variant of their electric vehicle has better performance and efficiency. The price of this new vehicle, priced at 269,500 yuan (US$37,492), is 14% higher than the basic edition, which has a 634km range.
Tesla's efforts aim to regain market share by targeting the popular family SUV segment, where domestic rivals are strong. The company has introduced stronger range versions—Model 3 Long-range RWD with 830 km range, and the Model Y L six-seat version launching in the fall. However, the full impact of these moves remains to be seen, as intense competition and price pressure are currently impacting Tesla's delivery volumes in China.
It's important to note that the Li Auto electric vehicle, which features a high-performance battery from LG Energy Solution, is also a player in this competitive landscape. However, the exact nature of the competition between Tesla and Li Auto or Xiaomi is unclear, as no prior context was provided.
Despite the challenges, Tesla remains optimistic about its future in China. The company's Gigafactory in Shanghai delivered 67,886 Model 3 and Model Y vehicles last month, demonstrating its production capabilities. As Tesla continues to adapt to local preferences and introduce new models, it will be interesting to see how the market responds.
- The rise of electric vehicles (EVs) in China, with competitors such as BYD, Xiaomi, and Li Auto, is causing a shift in the lifestyle and technology market, impacting Tesla's deliveries negatively.
- In an attempt to regain market share, Tesla is expanding its electric vehicle lineup, introducing a new model with a driving range of 830km, priced at 269,500 yuan (US$37,492), and targeting the popular family SUV segment where domestic rivals are strong.
