Tesla’s China strategy is a critical aspect of its global vision, Cathie Wood said. The manufacturer reduces prices in the country because it can, not because it has to. “For every cumulative doubling in the number of units produced, costs decline 28%,” she says.
Tesla cuts prices on vehicles because it can
Cathy Wood discusses Tesla’s strategic cost-cutting and positioning in China in an exclusive interview with Benzinga. This topic is hotly debated, especially among those betting against Tesla. It attracted attention after the company cut the price of its vehicles in China several times over the course of several months. Many investors were worried that the demand for cars was falling, and after the price drops, sales revenue would fall.
“Well, we know that Tesla cuts prices because it can,” Wood said, explaining the company’s strategic position in China.
“For every cumulative doubling in the number of units produced, costs decline 28%,” she added, to calm investors.
Tesla is the preferred car along with BYD in China
Wood noted that Tesla’s position in China is very strong, despite wide competition in the local market. She said that Tesla is as popular in the Chinese market as the local BYD.
“Tesla seems to be the preferred vehicle along with BYD [as] many of its vehicles are less expensive,” said Wood.
She noted that Tesla’s China strategy is a critical aspect of its global vision as the company transitions to lithium iron phosphate chemistry to produce local vehicles. This in turn lowers production costs even further, giving Tesla the ability to lower the price of its vehicles.
