Tesla's sales plummeted by 49%? (There have been related reports before China Exportsemi: Tesla's Global Sales Have Plunged: The Chip Created a Chokehold. Is Musk Worried About the Situation?）
The cost of the lower-priced Model Y plummeted by 20%? How?
Can the lower-priced Model Y save Tesla's sales?
……
Do you have a lot of questions here? Below, China Exportsemi will solve your doubts.
In recent years, the global new energy vehicle market has become increasingly competitive, and Tesla, as a pioneer in the industry, has attracted much attention for its market performance. However, in February 2025, Tesla's wholesale sales in the Chinese market plummeted by 49% year-on-year, delivering only 30,700 vehicles, the lowest in nearly two years. In this context, some technology media recently broke the news that Tesla plans to launch a low-cost version of Model Y, and hopes to regain market share with the strategy of reducing costs by 20%. Whether this move can help Tesla break through against the trend and become the focus of attention in the industry.
Tesla's sales plummeted: intensified market competition and external challenges
Tesla's sales decline in the Chinese market is not only affected by changes in the external market environment, but also reflects profound changes in the competitive landscape.
The rise of local brands and fierce market competition
The competition in China's new energy vehicle market is fierce, and local brands such as BYD, NIO, Xpeng, and Li have accelerated iteration and launched models with more cost-effective and intelligent advantages. For example, BYD has taken the lead in battery life, safety and cost control with its lithium iron phosphate blade battery technology, and has seized the market through a wide range of product layouts. In contrast, although Tesla has advantages in intelligence and software ecology, it still has shortcomings in price and localized services.
The price strategy is limited, and it is difficult to stimulate long-term growth with price reductions
In response to competitive pressure, Tesla has implemented multiple rounds of price reduction strategies in 2024. For example, in January, a discount of 10,000 yuan was launched for the final payment, and in April, the price of the whole series was reduced by 5.3%. Although it has promoted a certain increase in sales in the short term, it has also led to the intensification of the rights protection sentiment of old car owners, which has damaged brand loyalty. Over-reliance on price wars has squeezed Tesla's profit margins and raised doubts about the stability of its pricing strategy.
Changes in policy and economic environment affect the demand for car purchases
Since 2024, China's new energy vehicle subsidy policy has gradually declined, coupled with macroeconomic pressures, consumers have become more rational in car purchase decisions. At the same time, the technological progress of the new energy vehicle industry has made battery life and intelligent functions the standard, and consumers' demand for incremental innovation has risen, and it is difficult to maintain competitiveness in the long term by relying solely on price reduction.
The lower-priced Model Y: Tesla's market breakout strategy
If the revelations are true, then it is understandable that Tesla plans to launch a low-cost version of the Model Y to further tap the market potential amid pressure on sales. The model is said to be codenamed "E41" and is expected to start production at the Shanghai Gigafactory in 2026.
How to reduce the cost by 20%?
The low-cost Model Y is expected to produce 20% less than the refreshed Model Y by reducing costs through the "Depop" simplification concept. This strategy may rely primarily on the following:
Component optimization: Reduce some high-cost configurations, such as panoramic sunroof, advanced audio and other non-essential functions.
Production process optimization: The more advanced integrated die-casting process (Giga Casting) is used to reduce the number of body structural parts and improve production efficiency.
Battery scheme adjustment: A more economical version of the lithium iron phosphate battery may be adopted to further reduce costs.
Figure: Can the low-cost Model Y, with its 20% cost reduction, buck the trend?
Product positioning: How to distinguish it from the existing Model Y?
The official price of the Model Y in the Chinese market starts at CNY 263,500, and the refreshed Model Y will be launched in January 2025 and will introduce a number of improvements, such as a more aggressive styling, enhanced intelligent equipment, and improved range (593 km for the rear-wheel drive CLTC and 719 km for the all-wheel drive version).
The low-priced Model Y is expected to be aimed primarily at price-sensitive consumers and compete directly with models such as the BYD Song L and Xpeng G6. While the core powertrain is not expected to change significantly, the configuration tweaks will further lower the barrier to entry.
Industry impact: a new round of price wars and reshaping of the market structure
The price war may intensify, can Tesla take the initiative?
Tesla's entry into the market through the low-cost version of the Model Y may trigger a new round of price competition in the new energy vehicle market. Brands such as BYD and Xpeng may be forced to adjust their pricing strategies to defend their market share. However, compared with Chinese automakers with a more complete supply chain system, Tesla relies on imported chips, power batteries and other components, and has limited room for cost reduction. Therefore, there is still uncertainty about whether Tesla will be able to gain an advantage in this price war.
The market landscape may change, and Tesla's challenges and opportunities
If the low-cost version of the Model Y succeeds in seizing the market, it may squeeze the mid-to-high-end new energy SUV market, making the competition in the price range of 200,000~300,000 yuan more intense. At the same time, Tesla's brand value may also be affected, and long-term price cuts may weaken its premium brand image. In addition, Tesla's localized services in the Chinese market still need to be strengthened, such as after-sales service and charging network optimization, which will also affect consumer acceptance of the low-cost version of the Model Y.
Future outlook: Can Tesla buck the trend and break through?
Tesla's launch of the low-cost version of the Model Y is not only a strategic adjustment to deal with the current market challenges, but also a positive layout for future market trends. However, whether the market rebounds depends on a number of factors.
Technological innovation and intelligent upgrading are still the key
In the Chinese market, intelligence has become an important consideration for consumers when buying a car. Although Tesla is leading in FSD (full self-driving) and OTA (remote upgrade), domestic brands are more in line with local needs in terms of intelligent cockpit and voice interaction. If Tesla can enhance the intelligent experience on the low-cost version of the Model Y, it may be able to improve the attractiveness of the product.
Supply chain optimization and cost control are the guarantee of long-term competitiveness
Faced with the supply chain advantages of local Chinese brands, Tesla needs to further optimize the localized supply chain, such as expanding cooperation with Chinese power battery suppliers such as CATL, to reduce manufacturing costs.
Brand loyalty and user word-of-mouth building
Tesla's frequent price reduction strategy in recent years has led to dissatisfaction among some old car owners, which has had a negative impact on brand loyalty. If the price of the lower-priced Model Y fluctuates further after the launch, it may affect consumer confidence in car purchases. Therefore, how to balance price adjustment and user experience has become an urgent problem for Tesla to solve.
Conclusion
In the view of China Exportsemi, Tesla faced the challenge of declining sales in the Chinese market and sought a breakthrough in the market by launching a low-cost version of Model Y. This strategy may lead to sales growth in the short term, but long-term competition still relies on technological innovation, intelligent upgrades, supply chain optimization and brand management. In the future, Tesla needs to maintain its market share while continuously enhancing its brand value in order to maintain its leading position in the global new energy vehicle market.
