Tesla aims to cut costs by using more local parts, allowing it to import fewer components and avoid tariffs, people familiar with plans say
Shanghai/Beijing — Tesla is considering cutting the price of its China-built Model 3 sedans by 20% or more in 2020, people familiar with the plans said, betting the move will lure buyers as the world’s biggest electric-vehicle market slows.
CEO Elon Musk is counting on the multibillion-dollar Shanghai plant, Tesla’s first factory outside the US, to give it an edge over the likes of BMW and Daimler, which are also targeting China with new EV models. The move would also pressure local incumbents such as NIO and Xpeng Motors to follow suit with price cuts.
A 20% cut would bring the Model 3’s starting price below 300,000 yuan. Xpeng said in November that its new P7 sedan would be priced at between 270,000 and 370,000 yuan. NIO’s ES6 sport utility vehicle, its cheapest model, starts at 358,000 yuan.Competition is heating up as EV makers struggle through an unprecedented slump. Sales of electric cars have fallen for months in China after the government scaled back subsidies.
Shares of Tesla’s suppliers rose on expectations of increasing sales. Ningbo Tuopu, which makes suspension and vibration-control mechanisms, jumped as much as 4.4%, while parts manufacturer Ningbo Xusheng Auto Technology advanced as much as 9.2%.
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