Tesla problems pile up as it slashes China prices again
TESLA’S troubles deepened after it was forced to cut prices in China for the second time in three months.
The electric car maker lowered the starting price for its Chinese-produced Model Y vehicle to 259,900 Chinese yuan (£31,951) from 288,900 yuan (£35,516). Tesla also trimmed the price of its more affordable Model 3 cars to 229,900 yuan from 265,900 yuan.
The stock initially fell 7pc on Wall Street following the news but was later down around 1pc.
The price cut comes as Tesla faces increasing pressure in China from domestic rivals such as BYD, Nio and Xpeng, which are threatening its dominant position.
It is also facing challenges internationally with large car makers Mercedes-Benz Group and Porsche muscling into the market. The developments create a fresh headache for Tesla investors, who are still licking their wounds from 2022 when the company’s stock crashed 65pc in its worst-ever year.
Meanwhile, there are growing concerns that Tesla boss Elon Musk is becoming distracted by his ownership of Twitter, the social network site he bought for £36bn last year.
The decline in the share price has taken a heavy toll on Musk’s fortune, with the tycoon becoming the first person in history to lose £169bn ($200bn), knocking him off his perch as the world’s richest man. News of the price cuts came after the China Passenger Car Association said on Thursday that Tesla delivered 55,796 Chinese-made cars in December, the fewest in five months.
The glum figures followed a production update from the group on Monday which revealed that, on the whole, it had shipped 405,278 vehicles in the final quarter of 2022, which despite being a record high was below Wall Street estimates of up to 430,000, sending the share price tumbling.
Tesla said it had struggled with its supply chains and Covid-19related disruption over the period, particularly at its Shanghai factory. Despite being one of Tesla’s most important manufacturing hubs, it has been hit by closures and shutdowns due to pandemic restrictions and difficulties procuring supplies.