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Price reduction has become one of the ways for Tesla brand to seize the market, and previous price cuts have enhanced the brand's market competitiveness and maintained its monthly sales at more than 10,000 vehicles. At present, the lowest price of Tesla's products is 249900 yuan, so will Tesla still have room to reduce the price? Today, Guotai Junan Securities Company gives its own opinion.

Guotai Junan Securities said that Tesla's future profit model has been very certain. The price of the hardware is very low, basically it can be sold at cost, and more fees are charged through the back-end software market to achieve profit, so it is understandable from now on why Tesla's price has been going down.

Guotai Junan believes that in the future, Tesla may not intend to rely solely on the hardware manufacturing cost of electric vehicles to make a profit, but to rely on software services, which is also an important factor driving Tesla's continuous price reduction. According to Tesla's official website, the current price of Tesla's FSD (fully self-driving) option is as high as 64000 yuan, almost able to buy a car with its own brand.

The company also said that the advantage of China's industrial chain provides enough basis for Tesla to reduce prices, and the prices of Model 3 and Model Y should still have room to continue to decline. Model 3 is expected to be around 200000, and Model Y should be about 5% more expensive than Model 3. From the perspective of the competition pattern, the short-term impact of Tesla's price reduction is more on the mid-market of new car-building forces, including some new car-building forces in the domestic price belt of 10-200000, which may be relatively uncomfortable for some time to come.

In contrast, Tesla's price reduction has less impact on traditional car companies, especially BBA models and independent models, because Tesla is currently the representative of smart cars, which is actually a kind of new demand, but in another two years, when consumers' spontaneous demand for electric cars is getting stronger and stronger, it may have a greater impact on the traditional car and electric vehicle market.

It is undeniable that Tesla is indeed quite capricious in pricing after realizing localization. In December 2019, the price of the domestic Model 3 standard life upgrade version was 331050 yuan; in October 2020, the price of the domestic Model 3 standard battery life upgrade version was 249900 yuan. The price of this pure electric car has been reduced by 80,000 yuan in less than a year.

Tesla's last price adjustment was in New Year's Day this year. On January 1, 2021, Tesla's domestic Model Y officially went on sale, of which the long-lasting version of Model Y starts at 339900 yuan, down 148100 yuan from the previous price of 488000 yuan. The price of the Performance high-performance version starts at 369900 yuan, down 165100 yuan from the previous pre-price of 535000 yuan.

At the same time, the new Model 3 also went on sale on the same day, with the new car launching two models, the standard endurance version and the high-performance version, in which the standard endurance rear wheel drive upgrade version is still priced at 249900 yuan, and the Performance high-performance all-wheel drive version is priced at 339900 yuan, a reduction of 79900 yuan compared with the old model.

Many people think that Tesla's price reduction is a great harm to the brand, and it is really uncomfortable for car owners who began to reduce prices soon after they bought it, but from Tesla's point of view, it is more about the rapid iteration of the traditional car market.

Tesla delivered 15484 vehicles in January, a 35 per cent drop from the previous month, according to the Federation of passengers. Among them, Tesla Model 3 paid 13843 vehicles, an increase of 461.3% over the same period last year, and a month-on-month drop of 35.92%.

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