Tesla's 50% discount in China creates competitiveness in the key market

In a move to increase competitiveness in the key market China, Tesla is offering hefty discounts to its Chinese buyers.

The period for discounts of up to 10,000 yuan (US$1,451) started in October last year. Elon Musk’s electric-vehicle maker escalated the discounts in January, with another discount that left Tesla’s locally-made cars up to 14% cheaper than last year, and in some cases almost 50% less expensive than in the US and Europe.

According to Bloomber, the moves left rivals with little option but to follow suit. Among them were local upstarts such as Xpeng Inc. and Nio Inc. as well as leading international brands like Volkswagen AG and Mercedes-Benz Group AG, which offered discounts of up to 70,000 yuan ($10,000).

The cuts have come after a difficult time for China’s auto sector. Consumer spending was badly dented by long-running Covid restrictions, while sales have also been impacted by the removal of state subsidies on EV purchases at the end of last year. Supply-chain disruptions have hurt industries globally too.