Faced with factors such as pressure on raw materials and declining subsidies, domestic new energy vehicles are already “rising” even before 2023. However, Tesla started the "official downgrade" at an "untimely" time.

Faced with factors such as pressure on raw materials and declining subsidies, domestic new energy vehicles are already "rising" before 2023. However, Tesla started the "official downgrade" "untimely" at this time. Tesla officials have announced that for new car orders of Model 3 and Model Y that are delivered from January 1 this year (inclusive) to February 28, 2023 (inclusive), you can get a delivery incentive plan of 6,000 yuan and an insurance subsidy of 4,000 yuan (purchase the corresponding car insurance through Tesla’s cooperative insurance agency). In addition, there are also interest rate preferential plans for installment car purchases (covering until March 31). The comprehensive discount range of nearly 10,000 yuan is not an exaggeration for the guide price of Tesla's main sales model, but when placed in the context, it seems that the giant is taking the lead in a price war.

Is the "price war" an accident? Tesla is just following its own pace?

Since Tesla settled in Shanghai, its prices in the domestic market have been extremely sensitive. Before the domestic version of Model 3 was officially delivered, Tesla announced a high price of 355,800 yuan (before subsidies). Just after the turn of the year, at the beginning of 2020, the price of the domestically produced Model 3 was reduced. Counting subsidies, the selling price threshold dropped to less than 300,000 yuan. In April of the same year, affected by the subsidy policy, the price threshold of the domestic Model 3 fluctuated to more than 300,000 yuan. But just a week later, Tesla lowered its minimum price after subsidies to just over 270,000 yuan. In the second half of the year, the starting price of Tesla Model 3 even dropped to less than 250,000 yuan after subsidies. As a result, there was even a heated discussion among the public about whether the domestic Model 3 had any hope of falling below 200,000.

Of course, unlike previous price cuts that came as promised after refuting rumors, Tesla’s refutation of the rumor that Model 3 dropped below 200,000 yuan was successful. After further localization to reduce costs, the domestic Model 3's post-subsidised selling price reached the "lowest point" of 235,900 yuan, and has since ushered in a continuous upward phase. Even in March last year, Tesla ushered in two price increases within 5 days. The entry price of the domestic Model 3 has reached 279,900 yuan. This was also the starting line when Tesla launched the first wave of "price war" in October last year. But before that, Tesla's price changes are almost well-documented, such as the increase in localization rate, replacement of lithium iron phosphate batteries, fluctuations in subsidies, or changes in the international situation, etc. To sum up, "prices fluctuate around value."

As the "price war" that began in the fourth quarter of last year continues into 2023, Tesla's price fluctuation also reflects another feature, that is, the impact of supply and demand. Taking Model 3 as an example, compared with the delivery cycle of 4-8 weeks last year, Tesla had shortened this time to 1-5 weeks in November last year. Even on the eve of the Spring Festival, when delivery is often difficult, the delivery cycle of Model 3 remains at 1-4 weeks, and the same is true for the delivery cycle of the brand's other best-selling model, Model Y. On the one hand, it is increasing its production capacity and , and on the other hand, it is conducting a "price war" by combining official reductions, insurance subsidies and other methods. Tesla's domestic delivery volume exceeded 100,000 vehicles in November last year, and the cumulative delivery volume in the first 11 months also increased to more than 650,000 vehicles. At the same time, it helped Tesla's global delivery volume increase by 40% year-on-year last year, to 1.31 million vehicles (still a breath away from the 50% annual increase that Musk previously boasted).

But now that the sprint for 2022 is over, why should Tesla continue to increase the "price war" at the beginning of 2023? The answer may lie in Tesla’s own product line planning. For example, as a meritorious model under the brand, the Tesla Model 3 is about to be replaced if calculated according to the life cycle of a traditional fuel vehicle. At the end of last year, there was indeed more relevant information on the Internet. It is expected that the launch of new cars in 2023 is a high probability event. Similar to the situation, Model Y may also receive its own mid-term facelift this year. Although its large-scale domestic delivery is already in 2021, its release can actually be traced back to 2019. In the increasingly competitive new energy vehicle track, reducing prices of and destocking is the correct way to open up.

Finally, it is worth mentioning that the main reason why Tesla can adjust its price with ease regardless of the impact of costs or supply and demand is probably still inseparable from its profit margins that are the envy of its peers. Although BYD has overtaken Tesla to become the global sales leader of new energy vehicles, judging from last year's third quarter financial report, Tesla's gross profit margin is still 27.9% even though it has declined, far exceeding BYD's performance of 16.3% in the same period. This is also one of the fundamental reasons why Tesla dares to launch a "price war" but its opponents on the same track are unable to follow suit.

Who is hurting by Tesla’s price cuts?

So what impact will the "price war" caused by Tesla's "single dance" have on the market? I’m afraid I have to break it down into several parts to talk about. First of all, for pragmatic consumers, Tesla's product line, with a price threshold of more than 250,000 yuan, cannot be said to be very close to the people. After all, BYD's Dynasty series, new forces such as , Xpeng, 's P7, or traditional car companies' Volkswagen ID. series, etc., all have lower thresholds in terms of price and practicality. Even for consumers with a larger budget, if they pay special attention to the practical performance of the vehicle, there are still options such as , NIO, , and Ideal. The natural gap between their guide prices has led to a "price war" at the level of 10,000 yuan that cannot fail to play a decisive role.

Secondly, for "enthusiast" consumers who pursue individuality and technological experience, if it is the European and American markets, perhaps Tesla's products can ensure good appeal, and the "price war" can have the icing on the cake. However, in the Chinese market, Tesla’s driving assistance experience based on FSD is not widely accepted. According to information from a Tesla supplier, as of now (the end of last year), nearly 360,000 Tesla owners have purchased the full FSD function, more than 70% of which are from the United States, and nearly a quarter are from Europe, while the number of users in the Asia-Pacific region is only a few thousand, less than a fraction. Considering that Tesla is gradually moving away from the purely visual field, it may not be difficult to foresee who will be more attractive to this wave of "enthusiast" consumers compared with the Chinese car companies that are actively involved in lidar.

Finally, we are the "early adopters" of new energy vehicles. After all, for new energy vehicles, even pure electric vehicles, most users are currently dealing with them for the first time, and they are even in a wait-and-see state. They may not have such a clear direction on what they want in the new energy era. Tesla has undoubtedly played a role in attracting consumers interested in electric vehicles in recent years. Coupled with the intensity of the "price war", this attraction has also been visibly enhanced. But rather than finding the one among competitors that is most affected by Tesla's operations, it is better to focus on the traditional fuel vehicle market, which is shrinking at a rapid rate. And luxury brands that were originally in the price range of 250,000 to 400,000 yuan are switching to the new energy track.