Tesla's Price Reductions in China Costs a 3% Dip in the Company's Market Share

Tesla recently slashed the price tags of its cars in China by 10%. However, it seems that this decision has backfired on the company as its shares decreased on Monday in pre-market trading, according to a report by CNBC.

Down by 3%

Before the market opened on Monday in New York, shares of the electric vehicle manufacturer were down almost 3%. This is because one of the most important markets for Tesla, China, saw price cuts on its Model 3 and Model Y automobiles.

Even though the EV-maker giant is consistently increasing the price of its vehicles in the United States, Chinese customers can purchase them at a considerably lower cost.

The starting price of the Model 3 car was lowered from 279,900 Chinese yuan to 265,900 yuan ($36,615). The price of the Model Y sports utility vehicle has also decreased from 316,900 Yuan to 288,900 Yuan ($39,776).

Due to growing raw material costs, Tesla had to raise prices earlier this year in China and the US. But of course, these price increases have been partially offset by the company's recent price reductions.

Inflation Pressure

The CEO of Tesla, Elon Musk, issued a warning in March, stating that his electric car company has recently experienced severe inflation pressure in raw materials & logistics.

The price reductions also follow Musk's statement that he detects signs of a Chinese recession. According to the billionaire, China is mostly going through a "recession of sorts" in the real estate sector.

For the quarter ending September 30, Tesla delivered 343,000 units, falling short of analyst projections.

However, the number of cars delivered in China was not made public by the manufacturer. Additionally, as per CNBC, Tesla's third-quarter sales fell short of analyst predictions.

Tesla delivered 83,135 electric vehicles produced in China in September, according to the China Passenger Car Association's claim, setting a new monthly record for the firm. In the Chinese city of Shanghai, Tesla has a sizable Gigafactory that it upgraded earlier this year.

This article is owned by Tech Times

Written by Joaquin Victor Tacla