Tesla offers Model Y and Model 3 insurance price cut subsidy in China as it cracks down on expensive showrooms ↺
As Tesla's largest Gigafactory in Shanghai is roaring back from China's pandemic restrictions with a record production output of the Model 3 and Model Y, Tesla initiated a move some say could be a harbinger of a price cut. Starting September 16, it now offers buyers of the Model Y or Model 3 a price subsidy of RMB 8,000 (US$1,140) if they get insurance in the store as well.
Last month, Tesla exported a record number of these two made-in-China electric car models and the wait time for them has shortened significantly to just a few weeks, while dealers hint that there is even a small number of cars on hand for walk-ins. This may have prompted Tesla to start offering the insurance subsidy, but the move has upset owners who bought their Model 3 or Model Y just a few days before the de facto price cut, regardless of its modest amount compared to the overall price of the cars.
While Giga Shanghai is firing on all cylinders with a record manufacturing and export quantities, daily life in China is still affected by the rolling lockdowns that local governments are imposing on multimillion cities with COVID-19 outbreaks. Tesla has therefore decided that the prestige showroom locations in places like Beijing shopping malls are now only money pits and actually deduct from the customer service experience. According to Yale Zhang, a consultant at Shanghai's Automotive Foresight:
It's not necessary to open showrooms in expensive shopping malls, especially when the repair business has become lucrative. It makes better sense to keep only one or two showrooms downtown to keep the brand positioning but move more to suburbs.
With less people to look at or test drive the Tesla cars placed in malls, exorbitant rents make less economic sense and Tesla is reportedly looking to move its mall showrooms to the suburbs. Besides the cost savings, Tesla will be able to provide better service there by combining showrooms with repair services. Elon Musk is on a quest to greatly improve his car buyers' experience in China as Tesla has been facing many complaints about slow or spotty problem-solving from its customers there and is apparently taking measures to remedy them.