In the very competitive Chinese market, Elon Musk’s Tesla has adopted a strategy that has set off a price war among electric car manufacturers. The corporation has reduced the price of its cars by up to 50%, forcing other businesses to follow suit in order to remain competitive. Tesla’s significant price reduction even poses a danger to eliminating rivals from the market.
The Tesla strategy was put into effect in October. At its facility in Shanghai, Tesla, a major player in the Chinese market, produces its vehicles. Following the initial price decrease in October, Tesla’s locally produced cars are now 14% less expensive than they were a year ago. The cars were sometimes 50% less expensive than they would have been in the US and Europe.
Other automakers were obliged to lower their model prices as a result of Tesla’s aggressive pricing approach. Local and international brands are both involved in the price war. They include Xpeng, Nio Volkswagen, and Mercedes-Benz to name a few.
Mercedes-Benz has made a reduction of up to 70,000 Yuan (USD 10,000). The Mach-E electric sport utility vehicle from Ford Motor Company is now available for 209,000 yuan. As a result, it is about a third less expensive than in the US.
Jochen Siebert, managing director of JSC Automotive, a consultancy with operations in Shanghai and Stuttgart, claimed that “Tesla created havoc for the rest of the market.” Siebert was quoted by Bloomberg in its report on the situation.