Tesla Rolls out More China Discounts as Price War With BYD Heats Up

By Kimberley Kao

Tesla is rolling out more incentives to boost demand for its electric cars in China, the latest salvo in an ongoing price war with competitors such as BYD in the world's largest EV market.

Buyers of Tesla's existing inventory of its rear-wheel drive Model 3 and Model Y variants this month will be entitled to thousands of dollars' worth of incentives and discounts, the U.S. automaker said in a post on its company Weibo account on Friday.

That includes insurance subsidies of as much as 8,000 yuan (US$1,113), which would lower prices of a Model 3 and Model Y by more than 3% each to CNY245,900 and CNY250,900, respectively, Tesla said. It is also offering CNY10,000 discounts on some body paint colors.

Tesla has been facing pressure from heightened competition and industry price cuts in China as companies seek to gain market share amid slowing vehicle sales and overcapacity in the world's second largest economy.

The company's incentives come on heels of fresh price cuts by BYD, the Warren Buffet-backed car maker that last quarter overtook Tesla as the world's leading seller of EVs. BYD last week announced price cuts of more than 10% on some models, and this week launched new iterations of four vehicles at prices well below those of previous versions.

BYD's cuts are "exerting pressure on the overall industry," Kelvin Lau and Evelyn Zhang, analysts at Daiwa Capital Markets, said in a research note. "This also intensifies competition among new-energy vehicle makers for 2024."

Tesla in January cut the starting price of its entry-level Model 3 by 5.9% and the price of its Model Y by 2.8%.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

March 01, 2024 02:39 ET (07:39 GMT)

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