Tesla’s latest price cuts in China are said to result in “significant cancellations” for Chinese electric vehicle brands. However, deliveries are down month-to-month in October, according to Electrek.
In October, Tesla announced several price cuts for the Model 3/Y in China.
This was important news for Tesla since there have been early signs of a demand slowdown for the manufacturer, including much shorter delivery times.
Notably, it is the first time the Texas-based automaker pulled a demand bar since those signs of demand decline emerged.
In addition, the move was also significant since Tesla only cut prices in China, which is immensely important and the largest market for EV sales.
China’s October vehicle output
China’s Passenger Car Association (CPCA) issued the country’s vehicle output for October 2022 and confirmed that Tesla’s Gigafactory Shanghai’s output was 71,704 cars, down 83,000 in September.
However, a monthly basis may not be the best way to look at Tesla’s output in China, as it can be a bit cyclical. Usually, it is better off comparing it to the same month in the past quarter. However, July 2022 was not good for Tesla, with only 28,000 units due to a factory shutdown.
Furthermore, the price cuts are still too recent to affect deliveries, but according to Citi analyst Jeff Chung, “the price cuts are having an impact on demand.”
Tesla’s price cuts impact demand
In a Thursday report, Chung stated that they have checked with dealerships, and they believe that Tesla’s price cuts led to “significant order cancellations”:
“We sense Tesla’s recent price cut strategy has created a negative spill-over effect where a lot of China EV brands’ order backlog has suffered significant order cancellations according to our dealership channel checks.”
He didn’t explicitly name the brands. However, companies like NIO and XPeng are perceived to be Tesla’s biggest direct competitors in the country.
Based on the timing of the price cuts and Tesla ramped up production capacity at Giga Shanghai, the impact will possibly be seen in the numbers in November and December.
Additionally, there were rumors that Tesla was purposely limiting the output of Giga Shanghai in the fourth quarter, but the company denied the rumors during its third-quarter financial results.
