Tesla cuts vehicle prices in China by as much as $5,000

Tesla reduces their prices in China by 5 to 10 percent.

Tesla

Tesla has reversed its most recent price hikes across the board in China — cutting the cost of some models by 5 to 10 percent.

Just last month the company started offering incentives to those who bought Tesla’s insurance. Observers speculate this could signal the beginning of the price war in the country as numerous electric vehicle makers are jousting for the top spot. The implications could be far-reaching as more companies are building EVs, and a recession is looming. Price will be the number one factor for many considering an EV.

Reuters reports Tesla stated, “it was adjusting prices in line with costs. Capacity utilization at its Shanghai Gigafactory has improved, while the supply chain remains stable despite the impact on the economy of China's stringent zero-COVID restrictions, leading to lower costs.” However, the report also claims that retail sales numbers are down, and electric car demand has also slowed.

Interestingly, the slash in prices was reported by The Paper, a Chinese digital newspaper, a month ago. But the media outlet later reported that Tesla China responded to their story, saying “Rumors, false news,” and that customer service “has not received relevant notices.” The drop in prices was remarkably close to the decreases that were rumored a month ago.

There’s been no speculation of a price cut in North America; in fact, the demand remains high with long waiting lists. Elon Musk said during the third quarter earnings call that he doesn’t see that slowing down. He said every vehicle they make would be sold. However, Elon did comment on Twitter back in July of this year saying that Tesla can lower its prices if 'inflation calms down.' We'll have to wait and see if Tesla reduces their prices in any other regions.

However, he did discuss creating a new vehicle that many believe could be the Model 2. This Model is expected to be less expensive, therefore being more competitive with companies who are offering EVs at cheaper prices.

Price Reductions in China

• Model 3 RWD: reduced by $1,400 USD
• Model 3 Performance: reduced by $2,500 USD
• Model Y RWD: reduced by $2,400 USD
• Model Y Long Range: reduced by $5,100 USD
• Model Y Performance: reduced by $2,700 USD

While Tesla is the EV giant in North America, and much of the world, it is third place in China. BYD Motor and SAIC-GM-Wuling are the leaders in that country, but Tesla is gaining. The Shanghai factory is producing 22,000 units per week, a jump of nearly 5,000 since June. The company delivered more than 83,000 vehicles last month, the highest output since the factory open in 2019.

China Merchants Bank International (CMBI) told Reuters the price reductions highlight the looming recession and the industry-wide slowdown that is expected in the EV industry in China.  Shi Ji, an analyst with CMBI said, "The price cuts underscore the possible price war, which we have been emphasizing since August." Some Twitter users are posting screenshots of wait lists developing in China just hours after the prices were dropped.

Tesla Cuts Newly Formed Content and Ads Team, Musk says Ads Were “Too Generic”

Tesla eliminated a newly formed marketing team of about 40 employees as part of its global layoffs, Bloomberg reported on Monday morning. On X, Elon Musk said the ads created by the team were “far too generic” adding that they would apply to “any car”.

Exactly. The ads were far too generic – could’ve been any car.

— Elon Musk (@elonmusk) April 22, 2024

The team was led by Alexander Ingram who joined Tesla in August 2019 as Communication lead for Automotive. After a few different roles connected with content and social media, Ingram was promoted last December to Senior Manager of Global Growth Content. In the new role, he was leading a global team of creatives focused on Tesla's first ads, as well as social media.

Ingram put out some excellent behind-the-scenes videos on Tesla’s technological advancements such as the one below explaining Tesla’s single casting.

Tesla’s Advertisement Strategy

At Tesla’s 2023 annual meeting of shareholders, Elon Musk said that the company would “try a little advertising and see how it goes”. Since then, Tesla ads have been seen in Google search results and on YouTube.

In Tesla’s proxy statement filed last week, it is seen that the automaker has spent around $200,000 on X-advertising through February 2024.

“As part of a multi-platform advertising campaign, Tesla also directly or indirectly purchased advertising on X, which totaled approximately $0.2 million through February 2024”

Bloomberg’s source added that Tesla still has a smaller marketing team in Europe.

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Tesla Is Ending Its Current Referral Program; New Version Will Arrive in “A Few Months”

Tesla's Referral Program

Not a Tesla App

Tesla shared on X that it’s ending its current referral program globally by the end of April. It’ll be replaced by a new one, but that is still “a few months away”, according to CEO Elon Musk.

When Musk was asked if the current credits would be lost, Musk responded by saying “No, just that new credits would not be earned until we launch a future referral program.” That means there’ll be a gap of a couple of months when owners will not be able to earn referral credits.

Tesla was always famous for relying on its community to promote its vehicles rather than spending millions (or even billions) in ad campaigns.

Through Tesla’s referral program — which started back in 2015— customers have been earning referral credits by having friends use their referral link when ordering a Tesla product or taking their first demo drive. At the time, it started with a direct $1,000 prize for the referrer but later evolved to a more complex system with different tiers and points.

Prizes have changed a lot over the years

In its latest version, scheduled to end by the end of the month, Tesla models (S, X, and Y), along with Powerwall, solar panels, and solar roofs, are available for purchase using a referral link. In this version, owners can redeem credits from merchandise to software upgrades for their vehicles. They can even redeem credits for several months free of Premium Connectivity or FSD.

Our current referral program benefits will end after April 30 in all markets

— Tesla North America (@tesla_na) April 20, 2024

The Evolution of the Referral Program

Tesla’s first referral program was released in July 2015 where customers who referred new buyers would receive $1,000 for every new Tesla Model S delivered. For those who were able to accrue 5 or 10 referrals for the US automaker, Tesla raised the bar and offered invitations to the opening of its Giga Factories or even a fully loaded Model X.

Over the first 2 years, Tesla significantly increased the value of the prizes and even offered free or discounted Roadsters with enough referrals. However, in 2019, Elon Musk decided to stop amid cost concerns.

The referral program was re-launched in late 2019 offering new buyers free supercharging for a period of time, FSD access, premium connectivity, or $500 off a new vehicle.

What’s Next

Given the considerable gap of “a few months” between the current program and the next one, it is expected that Tesla will bring a new structure with updated awards focused on minimizing Tesla’s cost while increasing the brand’s awareness.

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