Following Elon Musk’s Electric Vehicle Company’s Decision To Lower Prices In China, Tesla Shares Dropped By 3% In Premarket Trading

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Last Updated on October 24, 2022 by Bitfinsider

After the company announced that it would reduce the price of some of its vehicles in China, Tesla shares dropped during premarket trading on Monday.

Before the opening of the New York stock market, the shares of the electric car manufacturer had dropped by approximately 3 percent.

China is one of the most important markets for Tesla, so the company recently reduced the prices of its Model 3 and Model Y automobiles in that country.

From a starting price of 279,900 Chinese yuan ($36,615), the Model 3 sedan is now available for purchase at a starting price of 265,900 Chinese yuan ($36,615) In comparison to its previous price of 316,900 yuan, the Model Y sports utility vehicle is now available for the price of 288,900 yuan.

The price decreases implemented by Tesla partially reverse some of the price increases that the company was required to implement earlier this year in China and the United States as a direct result of the rising costs of raw materials.

Elon Musk, CEO of Tesla, issued a warning in March that his electric car company is “seeing significant recent inflation pressure in raw materials and logistics.” Musk’s statement was made in reference to the rising costs of raw materials and logistics.

In addition, the price reductions come after Musk stated that he believes there are signs of a recession in China.

Musk stated the previous week that China is currently going through “a recession of sorts,” primarily in the real estate markets.

For the quarter that ended on September 30th, Tesla delivered 343,000 vehicles, which was below what industry analysts expected. There is no breakdown provided by the company regarding the number of vehicles that were shipped to China. In the third quarter, Tesla’s revenue came in significantly lower than analysts had anticipated.

Despite this, the China Passenger Car Association reported that Tesla set a new monthly delivery record in September with 83,135 electric vehicles made in China. This was a record for the company. It was earlier this year when Tesla finished making upgrades to its enormous Gigafactory in the city of Shanghai, which is located in China.

Despite this, the price cuts come as a response to increased competition for Tesla in China from local companies such as Warren Buffett’s BYD, which is a domestic competitor.

Other manufacturers of electric cars, such as BYD and Xpeng, have also increased their prices this year due to the rising cost of raw materials, which has impacted these businesses.

The Chinese economy is continuing to struggle, particularly as a result of the continued drag that strict Covid-19 controls are having on retail sales. In the third quarter, the gross domestic product increased 3.9% from the same period a year ago, which was higher than analysts had anticipated but still below the official target of around 5.5% growth.

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