On Friday, Tesla slashed prices of Model Y and Model 3 electric vehicles in China, its second price cut in less than three months.
After the latest price cuts, the starting price of the Model 3 fell to 229,900 yuan ($33,618.97) from 265,900 yuan, and the starting price of the Model Y dropped from 259,900 yuan to 288,900 yuan ($42,246.10). Earlier, in Oct., Tesla lowered the prices of its entire Model 3 and Model Y lineup in China.
The further cut come as Tesla tries to boost sales and reduce inventory.
In Dec., Tesla delivered 55,796 Chinese-made EVs, the lowest level in five months, according to data released by the China Passenger Car Association (CPCA) on Thursday. That's down 44% from Nov. and 21% from a year ago.
Meanwhile, Tesla's vehicle inventory in Shanghai Gigfactory also hikes. According to data from China Merchants Bank International (CMBI), in Oct., the company produced 87,706 Model 3s and Model Ys in Shanghai but delivered 71,704, leaving an inventory gap of 16,002. That was the biggest gap between production and sales since Tesla opened its Shanghai factory in late 2019, CMBI data showed.
It also cut prices on the two best-selling models in Japan, South Korea and Australia, part of an effort to help stoke demand for output from its Shanghai factory, Reuters reported, citing people with direct knowledge of the plan.
Tesla suspended production at its Shanghai plant, its most productive manufacturing hub, from Dec. 24 to Jan. 2, as part of the output reduction efforts, Reuters previously reported.
Globally, the EV maker's deliveries rose by 40% last year, missing CEO Elon Musk's 50% annual target.
The EV market is expected to slow down in 2023, as Beijing phases out cash subsidies and consumers become more wary of making large purchases out of fear of an economic downturn.
In a recent letter to employees, William Li, CEO and founder of Chinese EV upstart NIO, warned that the company could face difficulties in 2023 or beyond. "It will take a relatively long process for the economy and consumer confidence to recover from the COVID-19 pandemic," he wrote.