On Friday, Tesla announced that in China, if a new buyer could show a referral from an existing owner of a Tesla vehicle, the company would offer a cash bonus equivalent to almost $500 on its top-selling electric vehicles, escalating a growing price war in the largest market for electric vehicles in the world.
In the announcement, Tesla said that new buyers of its Model Y and Model 3 vehicles woudl qualify for a cash rebate of 3,500 yuan ($483) if they could offer a referral code from an existing owner of a Tesla vehicle.
Tesla also offered free access to its Enhanced Autopilot driver-assistance system for 90 days to new buyers.
After sparking a price war at the start of the year in China’s electric vehicle market, Tesla has slashed the base price of the Model 3 sedan by 14%, and cut the base price of the Model Y, its best seller globally, by 10%.
The rebate announcement came just one day after Tesla had joined 15 other Chinese EV companies, including EV manufacturers Nio, Li Auto and Xpeng, to agree to a pledge which was organized by the China Association of Automobile Manufacturers. The pledge stated the the participants would work to avoid, “abnormal pricing,” which many saw as agreeing to a truce in the growing price wars in the nation which were threatening to cut into the profitability of companies.
In a speech last month at an event attended by Chinese Premier Li Qiang, Ralf Brandstatter, CEO of Volkswagen’s China division said that the market for electric vehicles in China was stricken by “high price discounts,” and “an unhealthy competitive environment.”
Tesla’s offer, announced Friday on its Weibo account, is a continuation of an earlier offer which it had announced in June, which offered Chinese buyers 7,000 yuan as a rebate if they purchased one of the more expensive Model S or Model X vehicles.
On Friday a number of current Tesla owners posted their referral codes online, offering others the opportunity to use them, which indicates the cash rebate will be more widely available than anticipated for new buyers.
Data released earlier this week revealed that Tesla sold a record 247,217 Chinese-made vehicles in Q2. That was the highest quarterly number of deliveries since the company began deliveries of vehicles from its Shanghai plant in early 2020.
Over half of global deliveries in the second quarter were produced in the Shanghai factory.
Since early May, Tesla shares have risen almost 70% as investors saw evidence that global price cuts and incentives from the US government were igniting sales, and it appeared the company would stabilize its profit margins as time went on.
Earlier in the week, Tesla also cuts the prices on the Model 3 and Model Y in Japan by between 3% and 5%.
