Tesla’s China Strategy

Tesla’s been making bold moves in China over the last week, as the EV company dramatically slashed the cost of new Model 3s and Ys in their Asian market.

The Chinese market has access to both the Rear Wheel Drive and Dual Motor Performance versions of the Model 3 sedan - and the RWD, Dual Motor AWD, and the Dual Motor Performance versions of the Model Y crossover.

Currently, the price drops look to be around 2-4k USD, but some of the entries are more drastic - like the Model Y Dual Motor AWD, which started at about $52,100 USD, and is now about $45,100 USD.

For even more context, Tesla sells the Model Y Dual Motor AWD in the US for $65,990.

We all expect products to sell for different amounts in different markets, but what is it about the China market that has Tesla keeping the prices so low there?

It can’t be a lack of sales!

The China Passenger Car Association published some numbers for Tesla China’s sales back in December, and while it showed that Tesla China’s December sales of 55,796 had taken an almost 44% dive from November’s record 100,291 units.

And while that’s a little disappointing, the real news here is that in total, GigaShanghai sold 710,865 vehicles in 2022 - which is about 54.1% of Tesla’s total global sales for that year. A dip in sales during December doesn’t change the face that Tesla is really doing well in the Chinese market.

But they’re not in a secure position at the top of the pile.

Local electric vehicle competitor BYD actually outsold Tesla’s Model 3 in China during December with their Seal sedan - which reportedly has similar specifications to the Model 3 but was at a lower price point.

It’s not clear just yet if the intention is to compete with local manufacturers like BYD, or to just get sales numbers up in general - but a drop in price like this can only help Tesla stay on top this year.