BREAKING: Tesla cuts Model Y prices in China, offers insurance subsidy for Model 3

Tesla cut the prices of two pricier versions of the Model Y by RMB 14,000 in China and started offering an RMB 8,000 insurance subsidy for the Model 3 entry-level version in inventory.

(Image credit: CnEVPost)

Tesla (NASDAQ: TSLA) has cut the prices of its hot-selling SUV Model Y in China and started offering an insurance subsidy for inventory cars of the Model 3 sedan.

The US electric vehicle (EV) maker today cut the prices of both the Model Y Long Range and the Model Y Performance by 14,000 yuan ($1,930), or about 4 percent.

Following the move, the Model Y Long Range's starting price dropped to RMB 299,900 from RMB 313,900, and the Model Y Performance's starting price dropped to RMB 349,900 from RMB 363,900.

The starting price of the SUV's other available version in China, the entry-level rear-wheel-drive Model Y, remains unchanged at RMB 263,900.

Meanwhile, Tesla began offering a limited-time insurance subsidy of RMB 8,000 for customers who buy the entry-level Model 3 that has been produced.

Customers who buy an entry-level, rear-wheel-drive version of the Model 3 stock car between August 14 and September 30 can get the subsidy if they buy car insurance from an insurer that works with Tesla, according to a statement by Tesla.

The Model 3 is offered in two versions in China, including the entry rear-wheel-drive Model 3 and the dual-motor all-wheel-drive Model 3 Performance, starting at RMB 231,900 and RMB 331,900, respectively, and their prices were unchanged today. Tesla does not currently offer insurance subsidies for Model 3 Performance customers.

All of the above models are locally produced by Tesla at its Shanghai factory, and their expected delivery dates in China are unchanged, 1-4 weeks for each of the two versions of the Model 3, and 2-6 weeks for all three versions of the Model Y.

In addition to the Model 3 and Model Y, Tesla also sells the Model S and Model X in China, although they are imported.

Model S and Model X pricing in China is unchanged today, though Tesla has been offering discounts on both models since July, and those discounts are still available.

Tesla sold 64,285 China-made vehicles in July, including those exported as well as those delivered in China, the lowest of the year, according to data released earlier this month by the China Passenger Car Association (CPCA).

Tesla delivered 31,423 vehicles in China in July, and the Shanghai factory exported 32,862, according to the CPCA.

In the January-May period, the Model Y sold 152,461 retail units in China, up 87.03 percent year-on-year, and was the best-selling SUV in the country during that period, one of the CPCA's rankings shows.

It's worth noting that Tesla's revamped Model 3 seems to be not too far away from hitting the market.

On March 1, Reuters reported that Tesla was working to retool its Shanghai assembly plant in preparation for a revamped version of the Model 3, a project that Tesla codenamed Highland.

The Highland version of the Model 3 is expected to go into production in Shanghai in September, the Reuters report said, citing a person familiar with the matter.

On July 7, local media outlet Jiemian reported that production line tuning for the revamped Model 3 was almost complete, with prototypes then being tested on the factory's roads over the weekend.

Tesla's move today could spark a new round of heated price wars.

On January 6, Tesla drastically cut the prices of its locally produced models in China, becoming the first major EV maker to do so in the country.

A number of EV firms then followed Tesla's move, and in early March, a rare all-out price war erupted in China's auto industry as a number of fuel-car makers joined in.

However, instead of boosting sales, this triggered a wait-and-see mood among consumers, resulting in no increase in monthly car sales in China.

On March 22, the China Association of Automobile Manufacturers (CAAM) called for the hype about price cuts in China's auto industry to cool down, so that the industry can return to normal operation and ensure healthy and stable development of the industry throughout the year.

Since then, the price war in China's auto industry has gradually subsided, although some car companies had been offering discounts from time to time.

On July 6, the CAAM organized 16 car companies to issue a commitment letter, in which they promised not to disrupt the order of fair competition in the market with abnormal prices.

However, on July 8, the CAAM announced that it had adjusted the pledge by removing the price-related statement to avoid misunderstanding.

($1 = RMB 7.2383)

($1 = RMB 7.2383)

Data table: Price changes of Tesla models in China

(Vehicle information displayed on Tesla's China website on August 14, 2023.)