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Tesla (TSLA) turns positive after price drop as crowds flock to stores but are actually protesters

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After starting the day in the red due to an announced price cut in China, Tesla (TSLA) turned positive after crowds flocked to stores to buy cars.

The only problem is that they weren’t there to buy, but to protest.

Earlier today, we reported Tesla’s price cut in China, which added to demand concerns for the automaker in the key EV market.

The price drops on some Model 3 and Model Y trims were significant and, while having a negative effect on the company’s gross margin, we would expect them to be successful in increasing sales.

Shares of the company (TSLA) dropped significantly in premarket trading following the news.

Now Tesla investors and fans are sharing stories that shoppers are flocking to Tesla stores in China to buy after the price drops:

Since then, Tesla stock has turned positive and recovered from the drop that followed the price adjustment in China.

Nonetheless, electrek I learned that most of the crowds that flock to Tesla stores are there to protest price drops.

Several groups of recent Tesla buyers announced on Weibo that they were organizing protests at Tesla stores across the country. Protesters are sharing videos on China’s Weibo, and some of those videos are being shared in the US as shoppers rush to buy after the price drop.

Tesla customers in China have a history of protesting after price drops. They first did so in 2019 after a rare Tesla price drop, and again in October 2022 after a price drop.

The company has a famous policy of having consistent pricing without discounting, but it has recently strayed from that strategy.

Although reports of a price reduction arrived from China in late 2022, Tesla officials vehemently denied them, but the company specifically mentioned that no further price increases would occur in 2022.

Now, just days after the end of the year, Tesla has significantly lowered the price, and many customers who bought in late 2022 are frustrated.

Grace Tao, vice president of Tesla China, posted on Weibo today claiming that the price drop is actually linked to “engineering innovations” (translated from Chinese):

Behind Tesla’s price adjustments, there are numerous engineering innovations, which are essentially unique and excellent laws of cost control: including, but not limited to, vehicle integration design, production line design, supply chain management and even millisecond-level optimization of the robotic arm coordination route… Start with “first principles” and insist on cost pricing. Heed the country’s call with practical actions to promote economic development and unlock consumption potential. 2023 Let’s welcome a better life together.

However, many people are not buying this explanation. Historically, Tesla has boosted gross margins with cost improvements and only adjusted prices when necessary to create demand.

Electrek socket

Normally I wouldn’t support these protesters as they bought these vehicles for a price they agreed to, but it’s true that Tesla has been sending mixed messages to buyers in China.

Also, is anyone really believing Tao’s explanation? I see a lot of Tesla blogs running around with it without questioning it, but that hasn’t been Tesla’s MO.

Why would you cut prices if people are buying at those prices? This has been Tesla’s way for the past two years.

Featured image: Photo of a Tesla protester in China in 2021.

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