To keep its sales momentum at a constant pace, Tesla has decided to significantly lower the deposit requirements of its electric vehicles for customers in China. The move comes as the U.S. electric carmaker faces increased competition in the country, along with sales challenges related to recent reductions in government subsidies for new energy vehicles.
A representative from Tesla China revealed on Wednesday that the company is now reducing its deposits for new vehicle purchases to only 1,000 yuan, or roughly $143. Unlike its previous deposit requirement, which stood at around 20,000 yuan depending on the purchased model, the 1,000 yuan deposit is no longer refundable.
The reduced nonrefundable deposit will apply to all of Tesla's available models in China, including its Model 3 sedan, its Model X sport utility vehicle (SUV) and its Model S luxury vehicle.
Tesla's sales in the country since it opened its massive Gigafactory in Shanghai have been on an upward trend. Despite the spread of the coronavirus and the overall economic slump, Tesla has managed to report respectable sales numbers over the past few months. However, the company is now facing increased competition from both domestic and international players.
Local electric vehicle startup NIO recently received a massive injection of cash from various banks and a regional government fund, paving the way for its immediate emergence in the competitive industry. Meanwhile, German automotive giants such as Daimler and BMW have started to roll out their own electric vehicle models, stealing away some of Tesla's potential buyers.
Apart from the increased competition, Tesla is also facing some challenges in attracting new car buyers given the recent reduction in China's electric vehicle subsidies for models in certain price brackets. In April, Tesla did reduce the price of the base model of its China-made Model 3 sedans to meet the subsidiary criteria. However, its other models are unfortunately too expensive to be eligible for government subsidies.
Earlier in the week, reports emerged that a group of car dealers was offering significant group-buy discounts for Tesla Model 3 vehicles. Tesla has so far denied that it had any involvement in the promotional scheme. The company also clarified that it has not yet offered the units at a lowered price. Tesla typically does not offer any special rates to specific dealers as it wants to offer its vehicles to all customers at the same prices.
The Chinese car dealer group, called Yiauto, had reportedly offered to give a group-buy discount for the Tesla vehicles on the online e-commerce platform Pinduoduo. The offer reduced the prices of the vehicles by around 19,750 yuan each for bulk purchases.
