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Tesla officially announced that from now on, the price of the standard battery life and upgrade version of domestic Model 3 will be reduced by 32000 yuan, and the guidance price will be reduced from 323800 yuan to 291800 yuan. It is worth noting that this is the second official price reduction since the launch of the standard life upgrade version of domestic Model 3.

Tesla cut prices in order to meet the requirements of the latest subsidy policy for new energy vehicles issued by the Ministry of Finance in 2020. Therefore, after the price reduction, the domestic Model 3 falls into the scope of subsidy and enjoys the 20250 yuan subsidy given by the state, and the final consumer purchase price is 271550 yuan. At the same time, the configuration is no different from before.

"the subsidy threshold of 300000 is basically a precise assist for Tesla to cripple domestic pure electric brands," industry insiders said. On April 23, the Ministry of Finance and other four ministries jointly issued the Circular on improving the Financial subsidy Policy for the Promotion and Application of New Energy vehicles. It is proposed that the implementation period of the financial subsidy policy for the promotion and application of new energy vehicles will be extended to the end of 2022, and the subsidy standards from 2020 to 2022 will decline by 10%, 20% and 30% respectively on the basis of the previous year. The above subsidy policy will be implemented from April 23, 2020, with a transitional period from now to July 22, 2020. At the core, the new subsidy policy also stipulates for the first time that vehicles selling at a price of more than 300000 yuan after the transition period cannot enjoy the subsidy.

It means that if the domestic Model 3 does not lower its price, it will not be able to enjoy the subsidy after July 22. "the 300000 threshold is estimated to be designed to limit Tesla, but it gives Tesla the reason and necessity to reduce prices." industry insiders also said that Tesla's next countermeasures and pricing will be a 'disaster to the end'.

A few days later, Tesla officially announced a price reduction, and the guidance price of the domestic Model 3 standard service life and upgrade plummeted by 32000 to 291800 yuan, with the final subsidised price of 271550 yuan.

Although Tesla's practice will repeatedly hurt the hearts of old users, but after all, lower prices can attract more consumers, but get good sales at the terminal, directly hit consumers' psychology of buying cars. Tesla increased production capacity, sales performance at the same time, but also hit domestic competitors, so as the localization rate increased to reduce costs, Tesla will continue to reduce prices.

In addition, the price reduction does not involve the domestic Model 3 long-range rear-wheel drive version, which is still priced at 339050 yuan after subsidies and has a mileage of 668km, with the first delivery in June this year. With reference to Tesla's "usual" practice, we do not rule out the possibility of price reduction at the time of delivery of new cars, so that they can enjoy state new energy subsidies if they are reduced to less than 300000, thus "forcing" a further price reduction for the upgraded version of the domestic Model 3 standard.

Not long ago, there was news that the final price of the domestic standard battery life upgrade version of Model 3 would be reduced to 220000 yuan, but Tesla China's initial reply to the news of the upcoming sharp price reduction was "untrue." A few days later, Tesla announced his official surrender.

Tao Lin, vice president of foreign affairs of China, Tesla, said that as a relatively new thing, uncertainties such as policy guidance and changes in the industrial chain still exist, so Tesla will still respond to the market in the future.

Tesla CFO Zack Kirkhorn said in the earnings call, "in terms of production costs, the cost of producing a Model 3 in Shanghai has actually fallen below the cost of producing the same Model 3 at the Fremont plant. There is still a lot of room to continue to reduce costs, and the benefits of fixed cost absorption and mass production will continue to show from the second quarter to the end of this year. Tesla will continue to reduce prices, continue to reduce production costs, and even in the case of price reduction, can also increase profit margins. "

According to previous official sources, the localization rate of domestic Model 3 is only 30 per cent, and the localization rate of parts and components is planned to rise to 70 per cent by July and 100 per cent by the end of the year, using power batteries provided by local suppliers.

Domestic Tesla Model 3, with monthly production and sales of more than 10, 000 vehicles, has become one of the largest production and sales of new energy vehicles in China. According to the China Federation of passengers, domestic Model 3 sales reached 10160 in March, exceeding 10, 000 for the first time, accounting for 19% of China's total new energy vehicle sales that month. Tesla has also become one of the few brands in China to maintain sales growth.

By contrast, BYD sold 12256 pure electric vehicles in March and 1533 in the same month. Tesla, who continues to be hit by price cuts, in the eyes of industry insiders, will be a 'disaster to the end' for independent brands.

The high premium effect of Tesla brand, coupled with repeated price cuts to seize the market, is bound to seize the market share of domestic independent competitors. After all, more than 200,000 Model 3 is very attractive to many young consumers. Li Xiang, founder of ideal Automobile, said that domestic electric vehicles are generally under pressure, especially for products with higher prices, most of which will be suppressed by Tesla to less than 200000 yuan.

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