Musk’s Tesla infuriates the Chinese with a new price war on the electric car
The price war that Musk has unleashed in China has infuriated everyone: rival brands, customers who paid full price for Tesla and even the government that imposed the truce. Which the brand of the electric car infringed immediately after the signing
As required by the secular liturgy of the Chinese Communist Party, there was even a sumptuous and obviously exaggerated ceremony which saw the government on one side and sixteen manufacturers including Tesla on the other (not exactly convinced, all brought to the site practically by weight) sit at the same table to celebrate the end of the price war in the domestic market. Or rather, commit to ending it, given that on that occasion at the China Auto Forum in Shanghai the main automotive brands had to sign the rules dictated by the Ministry of Industry and Information Technology. But let's go in order.
TESLA, CHINA AND THE PRICE WAR
The price war broke out six months ago in China and Tesla has largely ridden it to attempt a daring overtaking on its rivals. Some amused observers even commented that for once a Westerner "showed the Chinese what it means to be Chinese". And this Tesla was able to do from the top of its incredible capitalization and from the low cost of labor of its plants in China.
The price war was actually expected, because as we have amply documented, Beijing has effectively unplugged the electric car, closing public incentives. The first to react to avoid collapses in sales and try to outdistance its rivals, precisely Tesla, which at the same time as the bonuses ended decided to attack the market with a purchase incentive of 10,000 yuan (about 1,400 euros) and at the same time cut list prices for cars from 6% to 13.5%.
Tesla's move started the well-known price war, which lasted for six months. Seres had retaliated with a reduction of at least 30 thousand yuan (4,200 euros) for all its models and was closely followed by Xpeng which had reduced the base price of the P7 sedan to 209,900 yuan (about 28,660 euros), the 12.5 % less than before. According to Reuters, all versions of the P5 and the sporty G3 have been lowered, with cuts ranging from 10% to 13%. And that's not all, because the domino effect has involved more and more brands and cars.
THE TRUCE IMPOSED BY BEIJING
A situation that has infuriated Beijing, which has therefore forced the brands to sign an agreement in four points that more or less sound like this: the obligation to "maintain fair competition and not to interrupt this fair competition with anomalous prices"; "do not exaggerate and do not use false advertising just to attract attention or acquire new customers"; “putting quality first” and then of course “promoting the core values of socialism, actively fulfilling social responsibilities and taking on the heavy responsibility of maintaining steady growth, building confidence and preventing risks”.
In short, no free market, we are Chinese. And if you make war on your neighbor, you bring the conflict into your home and create a situation that is disadvantageous for everyone. You don't need to be convinced liberals to understand how, in reality, the Chinese who ran into the dealerships were benefiting above all from the price war unleashed by Tesla (much less the brands, which saw their profit margins increasingly thin, in many cases suspects they even went under).
But it is also undeniable that the continuation of the discount game has infuriated even those who had taken a Tesla at full price or in any case with the first discounts which were then surpassed by increasingly attractive cuts. In short, Musk in one fell swoop infuriated Beijing, rivals and even users.
END OF THE TRUCE
If the price war unleashed by Tesla lasted just six months, the truce wanted by Beijing had a shorter, if possible, longevity. The day after the signing of the agreement, they write on Quattroruote , “Musk and his associates have launched a new promotional program, offering discounts of 3,500 yuan (just under 440 euros at current exchange rates) to potential buyers of the Model Y and 3. This too Once again, Tesla's move sparked immediate reactions, with Volkswagen's joint ventures with Saic and Faw launching new cuts for the electric ID family. May Musk's insolence teach China's party leaders once and for all about the free market?
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/tesla-di-musk-fa-infuriare-i-cinesi-con-una-nuova-guerra-dei-prezzi-sullauto-elettrica/ on Sun, 16 Jul 2023 05:07:33 +0000.