Comments on Tesla's price reduction: the industry-wide price war is about to start again

This round of Tesla’s price drop has been relatively large. We talked to industry experts about the market reaction and outlook since the price cut. Tesla’s price adjustment this time is very sincere (the domestically produced tsl basically has a profit margin of more than 3,000 US dollars), which will stimulate Tesla’s sales in the short term. In the medium term, we still need to wait and see the continuity of orders. In addition, from the perspective of the structure, it will affect the price reduction expectations of other brands, and bring some disturbance to the new energy vehicle market structure of 200,000-350,000 yuan.

1) 30,000 new orders were added within 3 days after the price cut, which was in line with expectations. Now the entire industry does not have strong confidence, and the overall first quarter is relatively sluggish. This order increase is more reasonable. Previously, Tesla’s main sales were rear-wheel drive models. After this price cut, the price-performance ratio of the four-wheel drive version has been greatly improved, and orders are obviously attractive. You can see from the official website that the delivery cycle of the Model Y long-range version has become longer.

2) Regarding whether Tesla will continue to cut prices in the future. We calculate that Tesla's domestic models still have a gross profit of about 10%, and there is a profit margin of 3,000 US dollars. Assuming that the industry is very poor in the second quarter, it is still possible to completely sacrifice profits to obtain sales, so we need to wait and see in the medium term. At the same time, the price bands of Tesla in the United States, China, Europe, and South Korea are quite different. It is judged that Tesla in Europe will have room for price cuts in the future. Therefore, Tesla will attach great importance to the progress of the pickup truck's listing.

3) This price reduction may pose a challenge to independent car companies such as Wei Xiaoli, and Tesla has an obvious advantage in cost reduction. Since the price cuts, the user groups including Xiaopeng P7, G9, NIO ES6, ET5, Ideal L7, L8, BYD Seal, and even the price range of RMB have been shaken, especially the young car models. We have communicated with dealers, and some car companies have begun to discuss whether there will be continued preferential or subsidy policies for terminals. However, except for BYD, other companies in the industry are already in a state of low gross profit, and we have to wait and see for this profit.