Tesla offers more incentives to buy its electric vehicles in the world’s largest EV market as it struggles to keep pace with Chinese competitors that have cut prices. The company said on Friday that it would give buyers in Shenzhen, a city near Shanghai where it makes its cars, a cash rebate of up to 7,000 yuan ($1,483) if they can supply a referral code from an existing owner. It also lowered the base price of its Model 3 sedan in China by 14% and the base price of its global best-seller, the Model Y, by 10%.
The company has been cutting prices on its EVs across the globe to get more sales before the end of this year, which is usually when carmakers sell their models at a lower price to reduce inventory levels and look good in quarterly results. Despite the discounts, Tesla’s stock has fallen this week on concerns about CEO Elon Musk’s political rhetoric and micromanagement of Twitter, selling of Tesla stock to fund his Twitter initiatives, and slowing vehicle sales in China as the country moves away from COVID-19 restrictions.
As a result, many Chinese consumers are buying EVs from local automakers rather than international brands. Tesla’s Model 3 and Model Y sales dropped last month as local companies took advantage of the cheaper prices.
To boost domestic demand, Tesla slashed prices for its cars in the country this week and will continue to do so to move more units before the year’s end. The company is also boosting a slew of features on its vehicles to lure consumers, such as free Supercharging miles for the vehicle’s life, programmable light shows that sync with other cars, and Dog Mode, which keeps an eye on a dog left in the car.
On Friday, Tesla announced it would notify some workers making battery packs at its Shanghai complex of layoffs. The company said it had to lay off some workers “due to the recent drop of EV sales in China.”
Tesla’s shares fell 4.2 percent on Friday after the announcement and were down 6.2 percent this week, the worst weekly decline since July. The rout in Tesla shares has been exacerbated by worries over the company’s ability to make enough vehicles to meet demand in the world’s biggest EV market and because of doubts about its profitability. The company’s stock has plunged more than 50 percent this year. Last month, it lost nearly half its value after slashing prices in China. Tesla has defended the price cuts, saying it is necessary to compete with Chinese manufacturers and maintain its market share in the world’s biggest EV market. But the company has also warned investors that it might need to slash its profit forecast for the year. It has warned that it may have to cut its production forecast for the second time this year and raise its capital expenditure budget.