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BEIJING, September 7 (TiPost)— Tesla , Inc.’s most productive factory achieved a production milestone as the U.S. electric vehicle (EV) giant is deepening the price war to boost sales.
Credit：Tesla
Tesla announced the 2 millionth China-made vehicle has been rolled off the production line of Shanghai Gigafactory on Wednesday. Touting as the production pace as Tesla Speed plus Shanghai Speed, Tesla’s official account of Chinese popular social media Weibo posted a video to show output of Shanghai factory increased from 1 million to 2 million units in just 13 months, while the factory took 33 months to achieve its first-million milestone. The video reviewed history of the factory from groundbreaking on January 7, 2019, the first delivery of built-in-China Model 3 and Model Y on December 30 2019 and January 1, 2021, respectively.
Shanghai factory became the most important hub for Tesla to export not just to China, but also Asia Pacific, Europe and other markets, according to the video. The factory took less than four years to produce 2 million vehicles, suggesting it boasts the highest production efficiency among Tesla’s facilities, the state-backed national newspaper the Securities Times reported. The paper learned Shanghai factory now has such an astonishing efficiency that allows it to make a vehicle in less than 40 seconds.
Shanghai factory’s milestone came as Tesla has aggressively engaged in lowering price worldwide, especially in China, to prop up sales regardless of margin. It lowered price by up to 13% in the country on January 6, making the starting price of Model Y and Model 3 down to new low and about 43% and 30% cheaper than those on sale in U.S. Tesla China surprisingly raised prices twice in four days in May after CEO Elon Musk signaled more cuts to come at the earnings call in April. But Musk suggested in July that his company still could further cut prices despite the earnings in the second quarter severely dented by major price cuts.
In mid August, Tesla reignited the price war in China even though it posted in July the lowest quarterly gross margin in four years during the second quarter of the year. The company said on August 14 that it reduced the starting prices for certain Model Y long-range and performance versions by RMB14,000 (US$1,935), or down 4.5% and 3.8%, in China. Following the second round of price cuts in the second half of the year, two versions now cost as low as RMB299,900 and RMB349,900, respectively. Tesla said it also would offer insurance subsidies of RMB8,000 from August 14 to September 30 for purchases of the entry-level, rear-wheel-drive versions of the Model 3 vehicles in inventory.
Last Friday, Tesla offered deeper discounts for two premium products in U.S. and China, two biggest markets. It set the starting price of RMB698,900 for its basic Model S and RMB738,900 for the entry-level Model X in China, cutting by around 14% and 21% respectively. Prices of their higher-end versions, the Model X Plaid and Model S Plaid, were sold at RMB828,900 and RMB838,900, representing the reduction of 20.8% and 19.4% respectively.
Tesla’s price competition was proved to be effective. The automaker sold 84,159 vehicles made in China in August, increasing 9.35% from a year earlier and 30.92% from the previous month, according to data that China Passenger Car Association (CPCA) released earlier this week. The industry body estimated sales of Tesla China surged 56.27% to 624,983 units from January to August.
