Tesla cuts prices in US, China and Germany as competition heats up

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Tesla announced aggressive price cuts in China and Germany, shortly after slashing prices in the United States, as the world's largest electric vehicle (EV) maker faces falling sales and competition growing in the main markets.

On Sunday, the electric vehicle giant slashed 14,000 yuan ($1,932) from the starting prices of four models sold in mainland China, its largest overseas market. The Model Y, the automaker's best-selling car in the country, now starts at its lowest price ever, at 249,900 yuan ($34,502).

In Germany, Tesla's largest market in Europe, the price of its rear-wheel drive Model 3 has also been lowered by 2,000 euros ($2,132) to 40,990 euros ($43,707), according to its official website.

The first cuts were announced in the United States on Friday, when Tesla reduced the prices of three of its five models. Prices for the Model Y, Model

This wave of reductions comes during a difficult period for Tesla. Its stock has plunged more than 40% since the start of the year, after reporting a drop in quarterly deliveries for the first time in nearly four years and announcing job cuts equivalent to more than 10% of its workforce overall.

On Saturday, Tesla CEO Elon Musk said he had postponed his planned trip to India, citing onerous obligations for the company. He was due to arrive in the country this week for a visit expected to include a meeting with Prime Minister Narendra Modi and confirmation that Tesla will build a factory in the world's most populous country.

In China, the world's largest electric vehicle market, Tesla's price cuts are expected to exacerbate an existing price war in a highly competitive sector.

On Monday, Chinese electric vehicle maker Li Auto (LI), led by billionaire entrepreneur Li Xiang, responded by announcing it was cutting prices on its four models with immediate effect. Its Li Mega, which it says is the world's largest passenger electric vehicle, now sells for 30,000 yuan ($4,142) less.

The American company was already facing strong competition there.

Tesla was briefly dethroned by China's BYD as the world's best-selling electric vehicle brand in the fourth quarter of last year. Compared to Tesla, BYD cars are more affordable.

Its entry-level model sells in China for the equivalent of just under $10,000. In contrast, Tesla's Model 3, its cheapest model, currently costs three times as much, at 231,900 yuan ($32,017) in China, following Sunday's price cut.

China's electric vehicle price war began in October 2022, when Tesla cut prices to boost sales as consumers cut spending in a slowing economy. Nearly every major manufacturer, including gasoline-powered vehicle makers, followed suit, impacting profit margins throughout the auto industry.

Competition continues unabated in 2024, with more than 30 major automakers announcing further price cuts.

On Friday, XPeng, the Guangzhou-based electric vehicle maker, announced it would offer 500 million yuan ($69 million) in subsidies to buyers who buy four of its models.

In March, BYD lowered the starting price of its most affordable electric vehicle, the Seagull sedan, by 5 percent to 69,800 yuan ($9,670). Later that month, smartphone maker Xiaomi joined the electric vehicle race by launching its SU7 sedan to take on Tesla.

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