Another round of price wars has begun

Author | Wang Lei

Editor | Qin Zhangyong

Facing the siege of new competitors, Tesla Model Y directly dealt a devastating blow.

A price drop of 10,000 yuan.

Competition in the industry has always favored those offering the best prices. Looking back at Tesla's past sales trends, every time the price is adjusted downward, sales experience a small surge.

Model Y can be considered a bellwether in the niche market, with many new cars recently targeting this product. As the year-end approaches, it's a crucial time for boosting sales. With Model Y's price cut at this juncture, a price war seems inevitable.

However, from another perspective, this is also good news. Some netizens have commented—

"It's good that the price has dropped, making Xiaomi SUV's price even lower."

01

Always the sales king

To boost sales at the end of the year, Tesla's approach is straightforward and brutal.

This official price drop primarily targets two versions of Model Y: the rear-wheel-drive version priced at 249,900 yuan and the long-range all-wheel-drive version priced at 299,900 yuan.

Customers purchasing these vehicles will receive a direct discount of 10,000 yuan upon final payment, and this discount can be combined with Tesla's long-standing five-year interest-free financing policy.

According to Tesla's official website, the policy of an immediate 10,000 yuan discount upon final payment is now available. Taking the entry-level Model Y rear-wheel-drive version as an example, after a 10,000 yuan discount, its price drops to 239,900 yuan, reaching an all-time low and also the lowest globally.

It's important to note that this is a "limited-time official price drop." Customers must place their orders and complete delivery between November 25, 2024, and December 31, 2024, to enjoy this discount.

Another factor considered by Tesla in setting the deadline of December 31 is local government subsidies and trade-in incentives.

Currently, most local governments have set a deadline of December 31 for announcing their replacement subsidies, which generally range from 15,000 to 20,000 yuan. If car purchases and subsidy applications are not completed before this date, customers may not be eligible for these benefits.

Doing a simple calculation, considering various current policies, the maximum national subsidy is 20,000 yuan, Tesla's 10,000 yuan discount on the final payment, and over 20,000 yuan in interest savings from Tesla's five-year interest-free policy. With these policies combined, customers can save at least 50,000 yuan by taking delivery before the end of the year.

Moreover, everyone knows that price reductions in the automotive industry are always aimed at "sales." However, Tesla has actually performed well in the first three quarters, especially with Model Y. Even with many models "sieging the Bright Summit," Model Y doesn't seem to have been significantly affected.

In the past two months, numerous "Model Y killers" have hit the market in this niche, including the Ledo L60, ZEEKR 7X, AITO 07, IM Motors IM7, XIMOTO LS6, and VOYAH ZEEKR 001, among others.

After the intense marketing campaigns by various automakers, the order volumes have indeed shown promising results. Many brands have received orders in a short period that even surpass the monthly sales of some brands. For example, the ZEEKR 7X received over 58,000 orders in just 20 days, while the XIMOTO LS6 surpassed 33,000 locked orders within 30 days of its launch, and the AITO 07 received over 25,000 firm orders in just 17 days.

However, as these new cars have been delivered for some time, none of these "killers" has been able to shake Model Y's position so far.

Perhaps due to production capacity constraints upon new model launches, the best-selling model has been the ZEEKR 7X, with 11,643 units sold in October and over 20,000 units delivered in 50 days since its launch.

In contrast, Tesla Model Y sold 36,204 units in October, a significant drop of over 10,000 units compared to September's 48,202 units, but it still maintains a commanding lead.

In the first three quarters, Tesla's cumulative retail sales in China reached 460,000 units, of which approximately 338,700 were Model Y, accounting for 73.37% of total sales. Model 3 accounted for 122,000 units, making Model Y the best-selling pure electric vehicle in the Chinese market.

Abandoning the reason for maintaining sales, the reason for Tesla's official price drop can be inferred. The reason for introducing more impactful cash incentives before the end of the year is simple: it is highly likely to sprint towards Tesla's 2024 annual sales target.

As the year-end approaches, all automakers are striving to meet their KPIs, and Tesla is no exception. After all, whether the annual sales target set at the beginning of the year can be met on time depends on this final push.

Tesla's annual sales target for 2024 is 1.81 million units, the same as last year. In the first three quarters of this year, Tesla delivered approximately 1.3 million electric vehicles globally. In October, Tesla sold 124,000 units globally, bringing the cumulative sales to 1.424 million units.

In other words, to achieve the delivery target of 1.81 million units, Tesla needs to sell nearly 400,000 vehicles in the remaining two months, averaging 200,000 units per month. However, considering Tesla's average monthly sales of nearly 150,000 units this year, this seems quite challenging.

In fact, to boost sales at the end of the year, Tesla has launched promotional activities simultaneously in both the domestic and global markets. However, the incentives in the Chinese market are the most direct, offering cash discounts.

For example, in the United States, customers who take delivery of a Tesla by December 31 can enjoy three months of free Supercharging and access to Full Self-Driving (FSD). In Europe, customers who take delivery of a Model Y by the end of the year can enjoy one year of free Supercharging.

Moreover, according to the official website, the estimated delivery date for Model Y has been updated from 1-6 weeks in early July to 1-3 weeks. Obviously, Tesla is also preparing its production capacity for the upcoming sprint.

02

New Model on the Horizon

Tesla's price reduction promotion for Model Y may not only be aimed at boosting year-end sales. Currently, another prevailing theory in the industry is that it is paving the way for the refreshed Model Y.

Not long ago, overseas bloggers revealed that the refreshed Model Y has officially rolled off the production line at Tesla's Shanghai Gigafactory and is undergoing various tests, with an expected official launch in early 2025.

Additionally, since its debut in March 2019 and first delivery in March 2020, Model Y has been on the market for nearly six years without a generation change. Considering the current pace of electric vehicle model updates, even a traditional fuel vehicle would be due for a generational change by now.

Moreover, clearing inventory through promotions before launching a new model is already a "basic operation" for Tesla. Previously, the old Model 3 frequently underwent price reductions and promotions near the end of the year, repeatedly setting new all-time low prices, before the refreshed Model 3 was suddenly launched at the beginning of the year.

The current situation seems strikingly similar to that before the launch of the Model 3 last year. Especially recently, spy shots and exposures of the new Model Y have surged.

As early as six months ago, heavily camouflaged spy shots of the refreshed Model Y began circulating online. As time passed, more details about the new Model Y were exposed.

A few days ago, based on the latest spy shots, overseas media drew the latest rendering of the new Tesla Model Y, which differs significantly from earlier renderings. In particular, the front design resembles that of the XPeng G6.

From the rendering, the most significant change after the redesign is the new front and rear light clusters. The front features split headlights, with a continuous daytime running light strip located at the seam of the hood and low and high beam headlight clusters on both sides of the front bumper. The trapezoidal air intake at the bottom is adorned with horizontal trim.

After adopting the through-type light cluster, the visual center of the front face is significantly lower, giving it a sharper appearance. The overall side profile still adopts a coupe-style design with a fastback shape. Moreover, from the rendering, one can see through the glass that the seats have also been replaced with the same sport seats as the new Model 3.

Additionally, the rear light clusters have been redesigned with a through-type design that echoes the front light clusters. This through-type taillight is not the common direct-type found on the market but rather appears to be a diffuse reflection type, which aligns with previously exposed spy shots.

Compared to the refreshed Model 3, the changes to Model Y are more significant. Although there is no specific interior exposure information available, it is highly likely that the interior will align with the current Model 3. For example, the traditional gear shift mechanism will be eliminated, and the operating buttons will be directly integrated into the center console screen.

Additionally, rumors suggest that the new car will be equipped with a large 95kWh battery pack, a 26% increase from the current 75kWh battery capacity, potentially extending the range of the long-range version to over 800 kilometers.

While the new Model Y is likely to be launched soon, it's important to note that the price of the redesigned Model Y will probably increase compared to the current model.

Moreover, it's unclear whether the current interest-free promotions will continue after the new model's launch, and it's also uncertain if government subsidies will persist. The price difference could be significant given these uncertainties.

Therefore, customers need to weigh whether to buy the outgoing model at a discounted price or pay more for the new model outright.