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Tesla Inc.’s TSLA recent price cuts in China may not have produced the desired effect as the domestic economy continues to bear the brunt of on-and-off COVID-19 recurrence.
What Happened: Tesla plans to announce another round of price cuts before the end of the year as orders didn’t measure up to the company’s expectations, local tech media outlet Huxiu said, citing unnamed sources, reported CnEVPost.
After a string of price hikes earlier this year in response to higher input costs, the electric vehicle maker announced in late October price cuts of about 5% on its Made-in-China, or MIC, Model 3 and Y vehicles. The October price cut, according to the report, resulted in 50,000 units of incremental orders.
Later on Nov. 8, Tesla said consumers who purchase Model 3 and Model Y vehicles that have been produced by Dec. 31 and have car insurance from its insurance partners will receive a discount of up to 8,000 yuan (about $1,120).
Tesla’s new orders in China remain anemic, averaging just a few cars per store per day, the report said, citing Huxiu. The poor reception to Tesla’s previous two promotions has been blamed on its failure to pay attention to competitors’ actions. The report also noted that new customers who either haven’t yet ordered or ordered but are yet to take deliveries were waiting on the sidelines to see whether Tesla will slash prices, the report added.
Why It’s Important: China is facing a harrowing time as several key cities and regions are forced to go under lockdown amid the COVID-19 resurgence. While these lockdowns have impacted production due to supply-chain constraints and factory shutdowns, the demand side is posing risk as well.
Amid an uncertain economic condition, consumer discretionary items such as cars will be deprioritized by consumers, which in turn is expected to serve as a drag on demand.
Price Action: Tesla closed Monday’s session down 6.84% at $167.87, according to Benzinga Pro data.
Read Next: How To Invest In Tesla (TSLA) Stock
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Image and article originally from www.benzinga.com. Read the original article here.