Tesla cuts prices in China for select Model Y versions
BEIJING, Aug 14 (Reuters) – Tesla (TSLA.O) on Monday said it has cut prices in China for its Model Y long-range and performance versions starting on Aug. 14, sending its shares lower on concern of further pressure on its profit margins. The electric-car company reduced the starting prices of both models by 14,000 yuan ($1,934.58). The Model Y Long Range’s starting price drops 4.5% to 299,900 yuan and the starting price of the Model Y Performance is now 349,900 yuan, down 3.8%.
In the same announcement, Tesla also said it would offer insurance subsidies in China of 8,000 yuan between Aug. 14 and Sept. 30 for buyers of the entry-level, rear-wheel-drive versions of the Model 3 vehicles in inventory. Tesla’s price cuts follow similar actions last month, which came despite a pledge made along with several other companies in China to avoid “abnormal pricing”, which some thought signalled a truce in the price wars that have threatened the profitability of the industry.
Evercore ISI analyst Chris McNally said in a research note that he expects similar select price cuts in the U.S. and Europe and that could lead to about 100 basis points of sequential pressure on Tesla’s third-quarter margins.
Shares of the company fell 2.7% to a more than two-month low of $236.15 in early trading.
Last month, Tesla CEO Elon Musk said further price cuts were a possibility, even if it squeezed the automaker’s margins.