Tesla announced on Friday that it will offer new customers of its top-selling electric vehicles in China a cash bonus of about $500 if they have a reference from an existing owner.
This has intensified a price war in the world’s largest EV market as he also stated that new customers will get free access to the company’s Enhanced Autopilot driver-assistance system for 90 days.
Since the beginning of the year, when it sparked a pricing war in China’s EV market, Tesla reduced the basic price of the Model 3 car in China by 14% and the Model Y, its global best-seller, by 10%.
Tesla announced the rebate a day after joining 15 other companies, including Chinese EV makers Nio, Li Auto, and Xpeng, in a pledge organized by the China Association of Automobile Manufacturers to avoid “abnormal pricing,” which some interpreted as a truce in an industry-wide price war.
Ralf Brandstatter, CEO of Volkswagen China, stated last month at an event attended by Chinese Premier Li Qiang that China’s market for electric vehicles was characterized by “high price discounts” and an “unhealthy competitive environment.”
Tesla announced the cash rebates on its Weibo account on Friday. It is extending a June offer of 7,000-yuan discounts to Chinese buyers of its more expensive Model S and Model X automobiles.
On Friday, some Tesla owners posted their referral codes online and asked others to use them, implying that the cash refund may be widely available for new purchasers.
According to data revealed earlier this week, Tesla sold a record 247,217 China-made vehicles in the second quarter. That was the most since the company began shipping vehicles from its Shanghai manufacturing in early 2020.
Since early May, the company’s stock has risen over 70% as investors reacted to signs that worldwide price cuts and government incentives were driving sales and anticipated the EV maker will be able to stabilize its profit margin over time.
In the second quarter, Tesla’s sales of cars manufactured in Shanghai accounted for more than half of its global deliveries.
While price cuts by Tesla and others increased sales in China earlier this year, those gains have begun to plateau in recent months, leading local governments to roll out new buyer incentives, including purchase tax exemptions for EVs.
