(Bloomberg) — Tesla Inc. shares fell in early trading after the carmaker again cut prices in China and said its only European factory would be disrupted due to unrest in the Red Sea.Thank you for reading this post, don't forget to subscribe!
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According to its website, the company cut the starting prices of the Model 3 sedan by 5.9% to 245,900 yuan ($34,300) and the Model Y sport utility vehicle by 2.8% to 258,900 yuan.
Hours earlier, Tesla told Reuters it would suspend most production at its Model Y plant near Berlin from January 29 to February 11 as suppliers alter transportation routes in response to the attacks on ships in the Red Sea.
Tesla fell 2.3% before the start of regular trading on Friday, giving shares their 11th decline in 12 sessions. The stock doubled last year.
Read more: How Red Sea attacks are disrupting world trade
Tesla has repeatedly cut prices in China since the end of 2022, prompting other manufacturers to respond and squeezing profit margins across the industry. Domestic manufacturers including Xpeng Inc and BYD Co and major international players such as Volkswagen AG have downsized their vehicles to protect market share. Still, only a third of local carmakers met their annual sales targets.
China’s EV market growth is projected to slow for the second consecutive year in 2024 as the country’s slow recovery from the pandemic is weighing on consumer sentiment. The China Passenger Car Association said this week that shipments of battery-electric and plug-in hybrid vehicles to dealers are expected to rise 25% this year to 11 million units. This compares to 36% in 2023 and 96% in 2022.
“The gap between Chinese automakers and Tesla has been unprecedentedly small,” UBS Group AG analyst Paul Gong said at an event earlier this year. He noted the speed at which Chinese companies have launched new models and their focus on advanced technology.
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Tesla plans to sell 1.81 million vehicles globally in 2023, more than half of which are shipped from its Shanghai factory. BYD became the world’s top seller of battery-electric cars in the fourth quarter, while the Elon Musk-led company met its annual delivery target.
Read more: Five things to watch out for in China’s car market this year
Bloomberg News reported late last month that Tesla revamped the six-year-old Model 3 in September and is preparing a new Model Y that could hit the market by mid-2024. Chinese automakers have been much more active in introducing new models, with Guangzhou-based Xpeng launching five models in 2023, and Li Auto Inc. planning a lineup of 11 models by 2025.
Tesla’s German factory opens in March 2022 and has the capacity to produce 375,000 vehicles per year. The company warned in October that it was gradually increasing production at its plants near Berlin and Austin to keep costs under control.
–With assistance from Danny Lee.
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