Tesla woes China fans with price strategy image

Although in the world’s biggest car market big prices mean prestige, premium ownership and luxury experience, Tesla decided to adopt a different price strategy for its coveted Model S.

Actually, the fact that their lower-than-usual 734,000 yuan ($121,400) China price tag for the Model S – which is still around 50% higher than in the US – only reflects “unavoidable” taxes and transport costs could prove a marketing coup. In the communist country foreign brands have been constantly under scrutiny from state media and regulators, who started an offensive against what they call rip off prices.

An unexpected blog post – another brilliant marketing strategy – titled “A Fair Price” and released last month drew outstanding support from China’s active net surfers after it was posted on popular Chinese social media channels – it detailed piece by piece their Model S price.

“If we were to follow standard industry practice, we could get away with charging twice as much for the Model S in China as we do in the United States. But we’re doing things differently,” Tesla said in the blog on January 22.

The idea could prove unsuccessful according to some analysts, as Chinese premium buyers are usually expecting a hefty price tag that would guarantee the luxury quality, or according to other opinions prove to be the turning point for other brands to follow.

“Price transparency helps because people see that as different, but the lower price itself, I don’t see a big impact from that,” said Andreas Graef, Shanghai-based principal focused on automotive at consultancy A.T. Kearney.

“It’s not just about the pricing strategy, but more to show how to communicate with Chinese consumers in the context of a more transparent pricing world,” said Shawn Wu, Shanghai-based project manager at consultancy SmithStreetSolutions.

Tesla in 2013 sold around 22,500, mostly in the United States but now the company expands its foreign arms to Europe and especially China, where it expects a one-third growth contribution to its sales.

Via Reuters