Tesla Records Modest Recovery in China Sales After Huge Price Cuts as Elon Musk’s “Funding Secured” Trial Begins

Rohail Saleem
Tesla China Trial

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Analysts waited with bated breath to gauge whether Tesla’s aggressive price cuts in the key Chinese market were sufficient to salvage plummeting demand for its EVs. Well, the weekly insurance numbers for EV sales in China released just moments ago give some room for optimism.

Source: Reuters

As a refresher, Tesla has pursued an aggressive price-cutting strategy across its key global markets in recent weeks to ward off a persistent decline in sales. For instance, in the first two weeks of January, Tesla slashed the price of its EVs by as much as 20 percent in the US to allow the Model Y variants to qualify for the $7,500 federal tax credit. Similarly, the EU has witnessed a discount of up to 17 percent on some variants, while China has received another price cut of up to 14 percent. Bear in mind that Tesla slashed the prices of its EV in China back in late 2022 as well, prompting a large number of buyers to stage a protest on being deprived of these lucrative recent price cuts.

Coming back, as is evident from the tweet above, Tesla managed to sell 12,654 EVs in China between the 09th and the 15th of January. For comparison, the company had managed to sell only 2,110 EVs in the first week of January.

Crucially, even after the recent price cuts in China, Tesla still maintains a gross profit margin of around 10 percent on each vehicle sold, equating to a gross profit of about $3,000 per vehicle. Moreover, unconfirmed reports suggest that the post-price-cut surge in orders has already eclipsed November 2022 totals.

Nonetheless, we would withhold our verdict on the efficacy of these price cuts until a definitive surge in sales volume is reflected in the hard Chinese sales data. As per the trend gleaned from the latest weekly Chinese EV insurance numbers, Tesla is still running below the September 2022 pace of selling 18,000 units per week.

Meanwhile, on what might prove to be a sizable distraction for Tesla investors this week, Elon Musk is scheduled to appear in court today as the class action lawsuit against the CEO of Tesla’s 2018 “funding secured” tweet begins.

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