Research on Tesla’s Price Strategy in China

Abstract

In 2021, Tesla, as the leader of electric vehicles, is very common in China. Traditional automobile price research shows that automobiles as a commodity have sufficient price elasticity of demand. However, early research also shows that electric vehicles do not have sufficient price elasticity of demand as a new type of vehicle. Starting from the price elasticity of demand, this paper analyzes Tesla's price strategy in China from three dimensions: theoretical model, econometric test, and case analysis. The research on Tesla's sales data through the ARIMA model and Linear Regression shows that Tesla's products have a significant price elasticity of demand, which is different from previous conclusions. The case also shows that price is Tesla's most effective weapon as a market entrant, and price reduction has brought Tesla a strong entry effect. However, the original incumbents in the Chinese market have been impacted by the market, failing to seize the advantages of time and geographical location to play a very good preventive effect.