February 2, 2023

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Tesla owners in China protest sudden price cuts they missed out on

SHANGHAI, Jan. 7 (Reuters) – Hundreds of Tesla cars (TSLA.O) Owners gathered in the company’s showrooms and distribution centers in China over the weekend, demanding rebates and credit after sudden price cuts that they said meant they overpaid for electric cars they had bought earlier.

On Saturday, about 200 new buyers of the Tesla Model Y and Model 3 gathered at a Tesla delivery center in Shanghai to protest the US automaker’s decision to cut prices for the second time in three months on Friday.

Many said they believed the prices Tesla charged for its cars late last year would not be cut as suddenly or deeply as the automaker just announced in a move to stimulate sales and boost production at its Shanghai plant. The scheduled expiration of government subsidies at the end of 2022 has also prompted many to end their purchases.

Videos posted on social media showed crowds at Tesla stores and delivery centers in other Chinese cities from Chengdu to Shenzhen, suggesting a broader consumer backlash.

After Friday’s surprise cuts, Tesla’s electric car prices in China are down between 13% and 24% from September levels.

Analysts said Tesla’s move is likely to boost its sales, which slumped in December, and force other electric car makers to cut prices as well at a time when demand in the world’s largest battery-powered vehicle market is faltering.

While established automakers often discount to manage inventory and keep factories running when demand weakens, Tesla operates without dealerships and transparent pricing has been part of its brand image.

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“It may be normal business practice, but this is not the manner in which a responsible enterprise should act,” said a Tesla owner protesting at the company’s delivery center in the Shanghai suburb of Minhang on Saturday, who gave his surname as Zhang.

He and other Tesla owners, who said they took delivery in the final months of 2022, said they were frustrated by Friday’s sudden drop in price cuts and Tesla’s failure to provide an explanation to new buyers.

Police facilitated a meeting between Tesla employees and the assembled owners, Zhang said, in which the owners handed over a list of demands, including an apology and compensation or other credits. He added that Tesla employees agreed to respond by Tuesday.

About a dozen police officers were seen at the Shanghai protest and most videos of other demonstrations showed a large police presence at Tesla sites.

Protests are not a rare occurrence in China, which over the years has seen people turn out in droves over issues such as financial or property fraud, but authorities were on high alert after large-scale protests in Chinese cities and major universities at the end of November against COVID-19 restrictions.

‘return the money’

Other videos that appear to be of Tesla owners protesting were also posted on Chinese social media platforms on Saturday.

One of the videos, confirmed by Reuters to have been filmed at a Tesla store in the southwestern city of Chengdu, showed a crowd chanting “Bring back the money, give back our cars.”

Another image, which appeared to have been shot in Beijing, showed police cars arriving to disperse the crowd outside a Tesla store.

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Reuters was unable to verify the content of any video.

A Tesla China spokesperson told Reuters on Saturday that Tesla does not plan to compensate buyers who took delivery of goods prior to the latest price cut.

He did not respond when asked to comment on the protests.

China accounted for about a third of Tesla’s global sales in 2021 and its Shanghai factory, which employs about 20,000 workers, is its single most productive and profitable factory.

Analysts have been positive about the potential for Tesla’s price cuts to drive sales growth as it’s been a year since the announcement of its next new vehicle, the Cybertruck.

“Nowhere else in the world does Tesla face the kind of competitors they have here [in China]said Bill Russo, president of Shanghai-based advisory firm Automobility Ltd.

“They’re in a much larger market for electric vehicles with companies that can price more aggressively than they can, yet.”

In 2021, Tesla faced a public relations storm after an unhappy customer hopped a car at the Shanghai Auto Show to protest the company’s handling of its complaint about its car’s brakes.

Tesla responded by apologizing to Chinese consumers for not addressing complaints in a timely manner.

(Cover) By Brenda Goh, Zhang Yan and Casey Hall Editing by Kevin Krolicki and Thomas Janowski

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