Elon’s Bet on Red Is in Trouble: Tesla Cuts Prices in China for Second Time in 3 Months Due to Poor Demand

Tesla has reportedly cut its vehicle prices in China for the second time in three months due to slow demand. Elon Musk placed big bets on expanding operations in China by cozying up to the Communist government, a gamble which seems to be going against him.

CNN reports that for the second time in less than three months, Tesla has reduced the prices of its Model 3 and Model Y vehicles in China in an effort to boost sales amid slowing demand in the world’s largest car market. According to CNN calculations, the starting price for the Model 3 has been reduced by 13.5 percent to 229,900 yuan ($33,515), and the starting price for the Model Y has been cut by 10 percent to 259,900 yuan ($37,889). This follows a price cut on October 24, when Tesla reduced the prices of the Model 3 and Model Y by up to 9.4 percent. Before that, Tesla had increased prices multiple times over the past two years.

In a statement on Friday, Tesla’s Vice President for External Relations in China, Grace Tao, said that the price cuts were “backed by innumerable engineering innovations” and were a response to the government’s call to “promote economic development and release the potential of domestic demand.” However, the price cuts come at a time when Tesla is reportedly struggling to maintain its sales in China, its biggest international market, where the company has made significant investments. In December, Tesla’s Shanghai factory delivered 55,796 vehicles, a decrease of 44 percent from November, according to recent figures from the China Passenger Car Association.

Breitbart News has reportedly extensively on Tesla CEO Elon Musk’s attempts to cozy up to the Chinese government, such as when he stated that the Communist country is “the future” and that America is full of “complacency and entitlement.” In August 2020, Musk stated in an interview on the Daily Drive podcast by Automotive News that people in the United States are “entitled” and “complacent” while Chinese citizens are “smart” and “hard-working people.”

In January 2021, musk praised China as “more responsible” than the United States. Speaking to Business Insider, Musk was questioned about the “ethical limitations” of his Tesla’s operation in China. He responded that so far he had a positive experience and that Chinese government officials could “possibly” be “more responsible” for their citizen’s happiness than America is.

In July 2021, Tesla reportedly urged Chinese social media censors to shut down criticism of the company’s vehicles.

In the same month, Musk’s official Chinese social media accounts celebrated the 100th anniversary of the founding of the Chinese Communist Party.

Tesla is also facing increasing competition from domestic brands in China, such as Nio, BYD, and Xpeng, which are “fighting for a smaller pie,” according to analysts at Wedbush Securities. The analysts added that a “potential pricing war” could occur as these brands compete for market share.

In addition to its struggles in China, Tesla has also suffered from declining sales globally. On Tuesday, the company’s share price had its worst day in two years, hit hard by weaker-than-expected sales data. Tesla’s shares ended 2022 down 65 percent, greatly reducing CEO Elon Musk’s net worth.

Analysts at Wedbush Securities have expressed concern about the demand for Tesla’s vehicles, stating that “the major worry now for Tesla is that the demand story especially out of China is showing heavy cracks in the armor.” They added that the company needs to “re-establish itself as a growth story” in order to regain investor confidence.

Read more at CNN here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan