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Tesla Slashes Model 3 Price In China To Qualify For (More) Government Subsidies

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by Tyler Durden
Friday, May 01, 2020 - 01:25 PM

As if Tesla just being in China, operating with Chinese sweetheart loans and using Chinese benefits to obtain factory land wasn't enough of a subsidy of its own, Tesla is now reportedly cutting the price of Model 3 sedans by 10% in order to qualify for additional subsidies.

The company started delivering vehicles from its Shanghai plant back in December and has cut its price for its Standard Range Model 3 to 271,550 yuan (USD $38,463.17), after receiving 20,250 yuan per car as EV subsidies, Reuters reported.

Meanwhile, Beijing had been up in the air about the future of EV subsidies prior to the coronavirus. In our continuing coverage of monthly Chinese auto sales, we noted that the government had taken a stance of wanting to rein in subsidies heading into late 2019.

That position appears to have softened as 2020 started and now, with the coronavirus pandemic shocking the world economy, it appears as though subsidies are already a foregone conclusion for the long term. In March, the Chinese government said all vehicles under 300,000 Yuan would qualify. We're not surprised to see Elon Musk first up, with his hands out, at that government feeding trough. 

We're also pretty sure that China doesn't mind it either. After all, putting themselves in a position of leverage over Tesla seems like it could be the CCP's ultimate goal, as we highlighted in a recent article. 

The issue was raised last Tuesday in a podcast with well known Tesla skeptic "Montana Skeptic", who recently authored an article about Tesla potentially turning into a Chinese company that we highlighted just days ago

"When you look at the share price, do you think about things like [Elon's] compensation package, which requires a $100 billion market cap?" Skeptic was asked by the host.

Skeptic responded: "I don't know. It's easy to become conspiratorial because the price is just so outrageously detached from fundamentals and because the level it's reached appears to be conveniently close to what he needs to achieve his next compensation award. I mean, as I tell the people who read my articles, right now stay away from this."

"There are forces larger than us moving this share price. There are forces larger than us. Do I fully understand them? No. Might it be Chinese money? Sure. Might it be offshore accounts of some sort? Possible. Might there be some unseemly things going on? It's always a possibility, too," he continued.

Skeptic concluded: "Regardless, my innocent assumption is there are a lot of people out there including big institutional investors that still either believe in the growth story or believe that it hasn't ended yet and that it makes sense to ride this thing with a momentum trade. And that's what we have to deal with."

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