Tesla offers cash rebate on top models in China

BEIJING: Tesla on Friday said it would offer new buyers of its Model Y and Model 3 vehicles a cash rebate of 3,500 yuan ($483) if they could cite a referral from an existing owner, deepening a price war in the world’s largest market for Electric Vehicles (EV).

Tesla also said new buyers would have free access to its Enhanced Autopilot driver-assistance system for 90 days.

Since the start of the year, when it touched off a price war in China’s EV market, Tesla has cut the base price of the Model 3 sedan in China by 14% and by 10% for the Model Y, its global best seller.

Tesla announced the rebate a day after joining 15 other companies, including Chinese EV makers Nio, Li Auto and Xpeng, in a pledge organized by the China Association of Automobile Manufacturers to avoid “abnormal pricing”, interpreted by some to signal a truce in a price war that had threatened industry-wide profitability.

Volkswagen’s China CEO Ralf Brandstatter said in a speech last month at an event attended by Chinese Premier Li Qiang that China’s market for electric vehicles was marked by “high price discounts” and “an unhealthy competitive environment”.

Tesla announced the cash rebates Friday on its Weibo account. It is continuing an earlier offer announced in June of 7,000-yuan rebates to buyers of its more expensive Model S and Model X vehicles in China.

A number of Tesla owners posted their referral codes online and invited others to use them on Friday, suggesting the cash rebate could be widely available for new buyers.

Tesla sold a record 247,217 China-made vehicles in the second quarter, data released earlier this week showed. That was the highest since it started delivering vehicles from its Shanghai factory in early 2020.

Tesla’s sales of cars produced in Shanghai in the second quarter accounted for over half of its global deliveries.

The company’s shares have climbed almost 70% since early May, as investors reacted to indications its global price cuts and U.S. government incentives were boosting sales and bet the EV maker would be able to stabilize its profit margin over time.

While the price cuts by Tesla and rivals boosted sales earlier this year in China, those gains have started to slow in recent months, prompting local authorities to roll out more buyer incentives, including purchase tax breaks for EVs.

Earlier this week, Tesla cut prices on the Model 3 and Model Y by between 3% and 4% in Japan.

Meanwhile, the company is believed to be laying off some battery production workers at its Shanghai plant, Bloomberg News reported on Friday, citing people familiar with the matter.

It was not clear how many workers may be let go, or the specific reasons behind the layoffs, according to the report.

Tesla did not immediately respond to a request for comment.

The layoffs were first reported by a local online news portal, Deep Analysis, on Thursday, which said that less than 1,000 workers were employed on the factory’s two battery production lines.

Tesla’s Gigafactory Shanghai, its largest and most productive plant, employs around 20,000 workers, including those in assembly building the Model Y and Model 3.

—Reuters.