Elon Musk's Tesla Causes Chaos in the Chinese Market

The American electric vehicle manufacturer, Elon Musk's Tesla, has unleashed a real price war in the Chinese market, the scale of which is already straining local authorities. The outcome of the confrontation could be the bankruptcy of several companies that simply cannot afford to engage in price dumping to maintain their market share. This has been reported by The Insider, referencing Bloomberg.

For the first time, Tesla announced large-scale discounts on its electric vehicles in October, and again in January. As a result of the program, the company's electric cars were 14% cheaper in the Chinese market compared to the previous year and nearly 50% cheaper compared to markets in the EU and the USA.

Tesla's discounts have forced the rest of the market to follow Musk's example. As a result, almost all major participants in the Chinese car market have announced their discount programs since the end of 2022, including local electric vehicle manufacturers like Xpeng Inc. and Nio Inc., as well as international automotive giants such as Volkswagen, Mercedes-Benz, and Ford. In total, about 30 electric vehicle manufacturing companies have offered their discounts.

“Tesla has created devastation in the market,” says Jochen Siebert, the executive director of Automotive, whose company has offices in Stuttgart and Shanghai. Local authorities are not pleased with the price war; on March 22, the China Automobile Manufacturers Association demanded that companies cease these activities, as such moves do not contribute to healthy competition and the development of the sector in the long term.

Authorities are calling on companies to “return to normal operations.” The association has also demanded that regional authorities stop providing subsidies to local manufacturers.