Tesla Inc slashed prices in Japan for its Model 3 and Y electric vehicles, the company said on Tuesday, the latest step in a global price war to boost volumes and counter competitive threats. The carmaker cut the price of the lower-priced Model 3 SR in Japan by low single-digit percentages, its website showed, while it reduced those of all Model Y variants by around 4%. The company kept the prices of its higher-priced Model S and X unchanged. Tesla said the price reduction made the Model 3 more affordable in Japan than before when using various subsidies with the purchase.
The company has slashed prices for its vehicles in China, South Korea, and Australia over the past three months as it seeks to drive demand amid signs that the market for electric cars may be slowing. The discounting has pushed Tesla’s margins to record-low levels and raised concerns about its ability to sustain profit growth. Chief Executive Elon Musk has said the company was willing to sacrifice margins to generate sales.
But the price cuts have yet to boost global deliveries of the Model 3, which accounts for almost a third of Tesla’s total sales. In October, vehicle deliveries fell month-to-month for a second straight time. The drop was due partly to a slowdown in China, where customers were concerned about a possible ban on the sale of new energy vehicles, which would have weighed on demand for all models.
A price war has also sprung up in the Chinese market among makers of plug-in hybrid and pure electric vehicles—carmakers such as BYD 0766.HK> have been cutting the prices of their vehicles to attract buyers, with some lowering them by as much as 30%. A sales and marketing manager at BYD’s top brand, Seal, told Reuters that the current discounts had helped to stoke demand for their products.
In China, the price cuts have meant that both the Model 3 and the Y are now 24% to 32% cheaper than in the United States, Tesla’s biggest market, Reuters calculations based on the website prices showed. Engineering innovations and cost controls enabled the price reductions, a Tesla spokeswoman in China said on Weibo.
Some Tesla owners in China who took delivery of their vehicles in recent months and did not qualify for the price cuts have planned protests at the showrooms of the carmaker in Shenzhen and Henan, screenshots of social media chats seen by Reuters showed. The company had no further comment. The latest cut, coupled with a reduction in October and incentives for Chinese buyers, means Tesla has slashed prices by 13% to 24% since September in the world’s largest auto market.
