Tesla will be hoping price cuts put China sales on the right track after 70pc plunge in October

  • Freeman Shen, CEO of WM Motor, sides with Tesla over sales figures, saying the Chinese Passenger Car Association is not always accurate
PUBLISHED : Wednesday, 28 November, 2018, 9:19pm
UPDATED : Wednesday, 28 November, 2018, 9:19pm

Tesla will be hoping that price cuts help it sell more cars in China after the US electric car maker’s sales on the mainland fall by 70 per cent year on year last month, although it disputes the figures cited by the China Passenger Car Association.

Tesla said in a statement that the numbers by the association were “wildly inaccurate”. It however did not disclose figures.

But Cui Dongshu, secretary general of the CPCA, told the South China Morning Post on Wednesday that their sales figure of 211 units was based on deliveries to end buyers.

“We are not aware of Tesla’s sales reporting mechanism, but our figure means that 211 Chinese buyers received the cars in October after transactions were completed,” he said.

However, Freeman Shen, CEO of WM Motor, told CNBC that he had doubts about CPCA’s figures.

“I doubt that number because, as a person who has been working in the Chinese auto industry for many years … the Chinese Passenger Car Association is not always accurate,” Shen told CNBC.

He said China car sales are “always kind of a mystery” because car makers report their data through a number of different channels.

In July, Tesla fell victim to the escalating trade war after Beijing slapped an additional 25 per cent tariff on American-made vehicles, a retaliatory measure against US levy on Chinese exports.

As a result Tesla raised the prices of the two models by about 20 per cent on the mainland.

Last week, it slashed prices of the Model S saloon and Model X SUV between 12 per cent and 26 per cent, saying it was absorbing a significant part of the tariff to help make its cars more affordable for mainland customers.

Tesla cuts prices of Model S and Model X cars in China to absorb trade war tariffs

“A price hike deterred some Chinese drivers from buying Tesla since July,” said Tian Maowei, a sales manager at Shanghai-based Yiyou Auto Service, a local dealer which does not sell Tesla cars. “After all, a 20 price increase amounts to an extra payment of more than 100,000 yuan (US$14,388).”

In the third quarter, Tesla sold a combined 3,169 cars on the mainland, down 37 per cent from a year ago, according to the CPCA.

In the first 10 months of this year, the US electric carmaker delivered 11,153 cars to mainland customers, down 2 per cent year on year, the association said.

Tian said Tesla is also facing competition from local rivals such as Nio. The Shanghai-based electric car start-up heavily outsold Tesla in October, moving 2,059 of its ES8 model.

The seven-seater SUV has a base price of 448,000 yuan before subsidies, nearly half the price of a Tesla X model after import duties are added.

Qian Kang, a Zhejiang-based entrepreneur dealing in car components, said that Tesla’s price cuts should win it new customers. “Tesla are still leaders in technology and design,” he said.

Last month, Tesla secured an 860,000 square metre plot in Shanghai for its planned “Gigafactory 3”, the company’s first plant outside the US.

Chief executive Elon Musk said in August the company expected to invest US$2 billion initially to produce 250,000 electric vehicles at the Shanghai plant.