Tesla, the global leader in new energy vehicles, has had a profound impact on the global automotive industry with its pricing strategy. Every competitor closely monitors every price change made by Tesla.At the beginning of this year's first quarter, Tesla took the lead in reducing prices, with price reductions of approximately 29,000 to 36,000 yuan for its popular models, the Model Y and Model 3. This led to announcements of price reductions by domestic new energy vehicle companies such as Xiaopeng, WM Motor, and NIO-SW.Now, at the beginning of the third quarter, Tesla has once again announced discounts ranging from 35,000 to 45,000 yuan for its Model S and Model X. Does this mean that Tesla is about to initiate a wave of price reductions in the second half of the year? Will other new energy vehicle companies face price pressure again?<h2>1. For Tesla, sales growth &gt; profit improvement</h2>This domestic price reduction is Tesla's sixth price adjustment since September last year, achieved through direct product price adjustments or indirect benefits promotions (such as 10,000 yuan insurance subsidies).According to Wallstreetcn·Jianzhi Research, Tesla's previous price adjustments were due to a significant decline in domestic sales since the end of last year. In December, sales were only 56,000 units, a decrease of 78.5% compared to the previous month and a decrease of 21.1% compared to the same period last year. Overall sales were weak, especially in the last month before the end of new energy vehicle subsidies. Instead of experiencing a surge in sales, Tesla had a sales decline, prompting them to implement significant price reductions at the beginning of this year to ensure sales growth.Looking at the subsequent situation after the price reduction, Tesla's price reduction strategy has undoubtedly been very effective. In China, while the sales of major domestic new energy vehicle companies showed a simultaneous decline in both year-on-year and month-on-month comparisons in the first quarter, Tesla showed signs of a good start in January, February, and March, with sales increasing month-on-month for three consecutive months. The total sales in the first quarter reached 229,000 units.<img src="https://pub.pbkrs.com/uploads/2023/3f50367e1ceb3b9b8638dadd6ce40ebc?x-oss-process=style/lg" alt="" original-src="https://pub.pbkrs.com/uploads/2023/3f50367e1ceb3b9b8638dadd6ce40ebc"/>From a global perspective, Tesla's sales also showed significant growth in the first quarter, reaching 423,000 units, a year-on-year increase of 36% and a month-on-month increase of 4%.Moreover, the price reductions by traditional automakers usually only maintain their effect for one quarter. However, the sales promotion effect brought about by Tesla's price reductions continued into the second quarter. Looking at Tesla's latest global sales figures for the second quarter, the overall sales reached 466,100 vehicles, an 83% year-on-year increase and a 10.2% month-on-month increase. This continued to set new sales records and exceeded market expectations. Clearly, Tesla's price reductions have hit the consumers' sweet spot.Although Tesla's gross margin decline in the first quarter attracted market attention (19.3%, a year-on-year decrease of 980 basis points), starting from the second quarter, Tesla eagerly introduced new price reduction strategies. In the face of the dilemma of not being able to have both fish and bear's paw, Tesla clearly and resolutely chose sales growth over profit improvement.<h2>2. How much impact do domestic new energy vehicle companies have?</h2>Looking at the follow-up impact of Tesla's last price reduction, domestic new energy vehicle companies, apart from BYD raising prices against the trend, have basically chosen to follow suit with price reductions, including WM Motor, Xiaopeng, NIO-SW, and LEAPMOTOR, among others. Of course, the price reductions are not solely due to Tesla.In the first half of this year, the price of lithium carbonate, an important raw material for new energy vehicles, continued to decline, dropping from a previous high of 600,000 yuan/ton to a low of 170,000 yuan/ton. In terms of raw material costs, it is obviously more favorable for new energy vehicle companies, which also gives them the confidence to lower prices.However, Huasheng Jiewen·Jianzhi Research believes that Tesla's price reduction this time will not have such a significant impact on domestic new energy vehicle companies.On the one hand, the models that Tesla reduced prices for in the last round were the popular models Model Y and Model 3, with price ranges after the reduction ranging from 230,000 yuan to 260,000 yuan, breaking the historical price lows for these two models. This price range is exactly the market range that domestic new energy vehicle companies are competing for, with many competitors and competing models, such as the BYD Han, Xiaopeng P7i, and WM Motor M5, among others.On the other hand, the models that Tesla reduced prices for this time are the high-end models Model S and Model X, with price ranges after the reduction ranging from 770,000 yuan to 860,000 yuan. There are not many domestic new energy vehicle companies involved in this price range, only the Hongqi new energy model E-HS9, GAC HiPhi X, Porsche Taycan, and others, and their sales volumes are not large to begin with (for example, GAC HiPhi, which sells the best, only sold a total of 4,349 units in 2022). Therefore, overall, the impact on domestic new energy vehicle companies is not significant.On the other hand, compared to the previous round of Tesla price reductions, which ranged from 29,000 yuan to 36,000 yuan, the overall price reduction is as high as about 10%. Although the Model S and Model X models of Tesla reduced prices by 35,000 yuan to 45,000 yuan in absolute terms, the price reduction is actually less than 5%.It is also worth noting that in May of this year, Tesla first raised the prices of the all-new Model S and all-new Model X models (an increase of 19,000 yuan). Therefore, if we consider the two price adjustments together, the price reduction is less than 3%.In conclusion, Tesla is still more willing to sacrifice profitability to ensure high sales growth, but domestic new energy vehicle companies will not follow suit with Tesla's price reduction strategy this time.

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Once closely following Tesla's price reduction, the new energy vehicle companies are saying NO to this price reduction.

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"Price-cutting king" Tesla reduces prices again, but the new players don't follow suit.