Tesla cuts model prices in China and US markets

The automaker reported its first year-on-year sales drop since the early days of the pandemic and its stock is down more than 40%

Tesla Inc cut prices in China and the US, its two key markets, after disappointing first quarter sales contributed to swelling inventory.

In China, Tesla lowered prices across its range, with the revamped Model 3 falling to 231,900 yuan (US$32,659) from 245,900 yuan previously. The Model Y was discounted to 249,900 yuan from 263,900 yuan.

In the US, the cheapest version of the Model Y is US$42,990, back to the sports utility vehicle’s lowest starting price.

Tesla also discounted the two other more expensive versions of the Model Y by US$2,000, and dropped the price of the Model X to its lowest yet.

The cuts cap a wild week for the Texas-based automaker, even by Tesla CEO Elon Musk’s standards.

It started when Musk announced in a memo to the company’s more than 140,000 employees that he was reducing headcount by more than 10 percent globally. Two top executives also left.

Tesla is to ask shareholders to vote again on a US$56 billion compensation for Musk that was voided by a Delaware court in January, the company said on Wednesday in its proxy statement.

On Friday, the company recalled almost 3,900 Cybertruck pickup trucks to fix or replace accelerator pedals that could dislodge and cause the vehicle to unintentionally accelerate, increasing the risk of a crash.

Then on Saturday, Musk postponed a planned trip to India, where he was expected to meet with Indian Prime Minister Narendra Modi, saying he had to deal with “heavy obligations” at Tesla.

Tesla is to report its first-quarter earnings tomorrow.

Its stock is down more than 40 percent this year on concern about slumping sales, intensifying competition in China and Musk’s risky plan to go “balls to the wall” on autonomy.

The automaker reported its first year-on-year sales drop since the early days of the COVID-19 pandemic, delivering 386,810 vehicles in the first quarter, well short of analyst estimates.

In China, Tesla’s market share shrank to about 6.7 percent in the fourth quarter of last year, from 10.5 percent in the first three months of the year, Bloomberg calculations based on China Passenger Car Association data showed.

The automaker recently pared back production schedules at its Shanghai factory, Bloomberg said late last month.

Shipments from its Shanghai plant — which makes electric vehicles for China and for export to other parts of Asia, Europe and Canada — declined in the first two months from a year earlier, even as overall passenger vehicle sales in China increased.