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

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

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

Earlier today, we reported on Tesla’s price cuts in China, which raised demand concerns for the automaker in the all-important EV market.

The price cuts on some Model 3 and Model Y models were significant, and while it will have a negative effect on the company’s gross margin, we expected it to be successful in boosting sales.

Shares of the company ( TSLA ) fell sharply in premarket trading following the news.

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

Tesla’s shares have since turned positive and recovered from the slide that followed the price adjustment in China.

However, Electrek learned that most of the crowds heading to Tesla stores are actually there to protest the price drop.

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 customers rush to buy after the price drop.

Tesla customers in China have a history of protesting after price cuts. They did this first in 2019 after a rare price drop by Tesla and then again in October 2022 after a price drop.

The company has a famous policy of having stable prices without discounts, but it has moved away from this strategy recently.

While reports of a price cut coming out of China in late 2022, Tesla officials vehemently denied them, but the company specifically mentioned that no further price increases would be coming in 2022.

Now, a few days after the end of the year, Tesla dropped the price significantly, and many customers who bought at the end of 2022 are frustrated.

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

Behind Tesla’s price adjustments, there are countless engineering innovations, which are essentially unique and brilliant laws of cost control: including but not limited to vehicle integration design, production line design, supply chain management of supply and even millisecond-level optimization of the robotic arm’s coordination path. … Start from “first principles” and insist on the cost price. Answer the country’s call with practical action to drive 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 increased gross margins with cost improvements and adjusted prices only when necessary to create demand.

Getting Electrek

Normally, I wouldn’t stand behind those protesters since they bought those vehicles for a price they agreed to, but it’s true that Tesla has sent mixed messages to buyers in China.

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

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

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

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