Tesla Launches Price War in China

Tesla has intensified its price war in China by reducing the prices of two versions of its Model Y SUV by approximately $1,900 each. The cost of the long-range Model Y was lowered by 14,000 yuan to 299,900 yuan, while the Model Y performance version also saw a similar reduction to 349,900 yuan. This equates to savings of 4.5% and 3.8%, respectively. Additionally, Tesla announced a temporary insurance subsidy of 8,000 yuan for its entry-level Model 3 in China. Despite a prior agreement among automakers to avoid "reckless" price wars, Tesla has continued to engage in aggressive price cuts, leading to concerns about its profit margins. In early August, Tesla reported a significant drop in China deliveries, down 31% in July, prompting discussions about its market performance. Despite these challenges, Tesla's shares have experienced a substantial increase of 97% year-to-date, outperforming the S&P 500's gain of 16%.