It appears that quite a lot happened at Tesla (TSLA) during the holiday week. The company decided to slash the prices of its Model S and Model X vehicles by 12-26% in China. In July, the automaker had hiked its prices by 20% in the nation to cope with the new tariffs but it seems to be reversing its decision now in an attempt to make its cars affordable.
The tariff issue appears to have led Tesla to accelerate the construction of its Gigafactory 3 located in Shanghai, China. Amid the ongoing trade concerns between the US and China, the company wants to finish the factory soon in order to escape the increasing tariffs.
Tesla is said to have ramped up hiring for its Gigafactory construction significantly. The factory will be financed through local funding and it will take around two years to start vehicle production. Although Tesla intends to primarily produce the Model 3 in China at present, if the company is able to expand this plan to include other models, it could help tackle prices furthermore.
Considering the fact that China has a massive market for electric vehicles, it makes sense for Tesla to increase its investments and resources in the country as this could pave the way for it to become a major player in this space in future. For the same reason, irrespective of the outcome of the trade issues between the US and China, Tesla is likely to do everything it can to grow in the Asian nation.
Another interesting point is Tesla’s huge sales growth in California. According to a report by Electrek, Tesla’s total vehicle deliveries in California increased by around 400% in Q3 2018 versus the year-ago period and its market share for all electric vehicles grew to a record 4%.
Last quarter, Tesla’s deliveries amounted to 83,775 vehicles globally and 70,000 vehicles in the US. California comprised 27% of total global sales and 32% of total US sales. The Model 3 is believed to be a key driver of this growth.
The Model 3 had reportedly been facing some issues lately with its door handles due to the cold weather and Tesla just released a new software update to resolve the issue. Tesla also plans to expand its Supercharger network significantly and is looking to double the number of its Superchargers by the end of next year.
Tesla’s shares are up 5% thus far this year and looking at the past one month, the shares have climbed over 26%. On the news of the China vehicle price cuts, the stock dropped over 3% on Friday. As of half-day market close, the stock was down 3.6%.