Tesla owners protest against surprise price cuts they missed

SHANGHAI - Hundreds of Tesla owners gathered at the automaker's showrooms and distribution centers in China over the weekend, demanding rebates and credit after sudden price cuts they said meant they had overpaid for electric vehicles they bought earlier.

On Saturday, about 200 recent buyers of the Tesla Model Y and Model 3 gathered at a Tesla delivery center in Shanghai to protest against the U.S. carmaker's decision to slash prices for the second time in three months on Friday.

Many said they had believed that prices Tesla charged for EVs late last year would not be cut as abruptly or as deeply as the automaker just announced in a move to spur sales and support production at a Shanghai assembly plant. The scheduled expiration of a government subsidy at the end of 2022 also drove many to finalize their purchases.

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

After Friday's surprise discounts, Tesla's EV prices in China are now between 13 percent and 24 percent below their September levels.

Analysts have said Tesla's move was likely to boost its sales, which tumbled in December, and force other EV makers to cut prices too at a time of faltering demand in the world's largest market for battery-powered cars.

"Price cuts are part of this EV cycle in a softer (economy) with competition increasing in China," Daniel Ives, an analyst who follows Tesla at Wedbush Morgan, said in a tweet on Friday.

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.

"It may be a normal business practice but this is not how a responsible enterprise should behave," said one Tesla owner protesting at the company's delivery centre in Shanghai's Minhang suburb on Saturday who gave his surname as Zhang.

He and the other Tesla owners, who said they had taken delivery in the final months of 2022, said they were frustrated with the abruptness of Friday's price cut and Tesla's lack of an explanation to recent buyers.

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

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

One video, which Reuters verified was filmed at a Tesla store in the southwestern city of Chengdu, showed a crowd chanting, "Return the money, refund our cars."

Another, which appeared to be filmed in Beijing, showed police cars arriving to disperse crowds outside a Tesla store.

Reuters was unable to verify the content of either video.

Tesla does not plan to compensate buyers who took delivery before the most recent price cut, a spokesman for Tesla China told Reuters on Saturday.

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 plant.

Analysts have been positive about the potential for Tesla's price cuts to drive sales growth at a time when it is a year from launching its next new vehicle, the Cybertruck.

"Nowhere else in the world is Tesla faced with the kind of competitors that they have here [in China]," said Bill Russo, head of consultancy Automobility Ltd. in Shanghai.

"They are in a much bigger EV market with companies that can price more aggressively than they can, until now."

In 2021, Tesla faced a public relations storm after an unhappy customer climbed on a car at the Shanghai auto show to protest against the company's handling of her complaints about her car's brakes.

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