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Analysts have been waiting impatiently to gauge whether Tesla’s aggressive price cuts in the key Chinese market are enough to rescue dwindling demand for its electric vehicles. Well, the weekly insurance figures for electric vehicle sales in China that were released just moments ago give room for optimism.
As a refresher, Tesla has pursued an aggressive price-cutting strategy across its major global markets in recent weeks to fend off a sustained decline in sales. For example, in the first two weeks of January, Tesla cut the price of its electric vehicles by up to 20 percent in the United States to allow Model Y variants to qualify for a $7,500 federal tax credit. Similarly, the European Union saw a discount of up to 17% on some variants, while China received another price cut of up to 14%. Keep in mind that Tesla slashed the prices of its electric car in China in late 2022 as well, prompting a slew of buyers to protest being denied such lucrative price cuts recently.
China PV January 9-15 Units insured
NEV
BYD
🥈 Tesla
🥉 Chang’an
✴️ICEV
🥇FAW-VW
🥈 Changan
🥉 SAIC-VW
(ZHU YULONG’s microblog) https://t.co/rwz1WcQzOP pic.twitter.com/n8ys5FwPHK– Moneyball (MoneybaII_R) January 17, 2023
Going back, as evidenced by the tweet above, Tesla managed to sell 12,654 EVs in China between 09y and 15y January. For comparison, the company only managed to sell 2,110 vehicles in the first week of January.
Unnamed Tesla sales reps:
✴️ After the price reduction, the orders received in one day exceeded the total orders for November
✴️ Background system shows today’s orders / record close to 80 thousand
(JIEMIAN, REPORT January 12) https://t.co/8fTzFBpyqM– Moneyball (MoneybaII_R) January 17, 2023
Crucially, even after recent price cuts in China, Tesla still maintains a gross profit margin of about 10 percent on every car sold, which equates to a gross profit of about $3,000 per car. Moreover, unconfirmed reports indicate that the rise in orders after the price cut has already exceeded November 2022 totals.
TSLA dollars It was selling 18k/week on Sept 22 when prices were 22% higher than now.
These numbers are so weak – given the sharp cuts – that there are even rumors in China about it TSLA dollars It may cut the price of the Model 3 by another 13%. pic.twitter.com/TmFjhrpk4y
– Motorhead (BradMunchen) January 17, 2023
However, we will withhold our judgment on the effectiveness of these price cuts until the eventual increase in sales volume is reflected in the difficult Chinese sales data. According to the trend obtained from China’s latest weekly insurance figures for electric vehicles, Tesla is still running below its September 2022 pace of selling 18,000 units per week.
Elon Musk’s “Get Funded Secured” trial begins today at SFO and runs through February 1. Judge Edward Chen has already determined that Elon’s 2018 tweet was wrong and reckless. Elon prepared to testify Wednesday. The jury will have to decide if the tweet was material and if he knew it was false. https://t.co/t4sq8Qoy87
– Gary Black (@garyblack00) January 17, 2023
Meanwhile, on what could be a major distraction for Tesla investors this week, Elon Musk is scheduled to appear in court today as his class action lawsuit against the Tesla CEO begins his 2018 “secured financing” tweet.