Chinese consumers don't really have a lot of options when it comes to buying EVs right now, and the country's NEV market is far from a zero-sum game, said Tesla's Grace Tao.

(Image credit: CnEVPost)

Tesla's (NASDAQ: TSLA) dramatic price cut in China last week has raised many concerns about the move's impact on its Chinese peers, though in the view of one company executive, they're not competitors.

Tesla has never seen other electric vehicle (EV) makers as competitors, and the industry players have to work together to make their products better and meet the needs of different market segments, said Grace Tao, Tesla's vice president of external affairs.

Tao made the remarks in a January 9 interview with Chinese media, according to an Auto Report report today. On January 6, Tesla sharply lowered the prices of its entire Model 3 and Model Y lineup in China, sparking protests from many owners who had recently received deliveries and discussions that local EV companies would take a hit.

Before consumers can choose an EV, they first need to decide whether to buy an internal combustion engine car or an EV, and only later decide which of the EV models to choose, Tao said, adding that when they do decide to buy an EV, there aren't really that many choices.

Tesla is only producing two models in China right now, but the people actually have a lot of various needs that can't necessarily be met from Tesla's two models, Tao said.

"We also wish to see a variety of electric vehicle models in the market to meet everyone's needs," she said.

Put another way, China's new energy vehicle (NEV) market is far from a zero-sum game, she added.

If any other EV brand can produce a much better product than Tesla and attract people to buy it, that's good, too, and helps motivate the company to improve its own products, Tao said.

Tao also mentioned that product price adjustments reflect a car company's forecast for cost changes over the next period.

The biggest difference between 2023 and last year is that the Covid pandemic is largely behind and the supply chain is largely back to normal, she said, adding that the uncertainty of costs due to unpredictable shortages of supplies like in previous years may not occur.

"I personally feel that the price adjustment reflects, in a sense, our better planning for the supply chain. We will make these adjustments in line with our projections of the approximate level of vehicle costs," Tao said.

She also mentioned that 95 percent of Tesla's parts supply is currently obtained locally in China, and there won't be much room to increase that percentage, so after the latest adjustments, Tesla's prices in China will be stable.

Tao also commented on the owners' protests, saying she hoped people would gradually recognize Tesla's philosophy.

Tesla's direct sales model and price adjustment strategy is a very new concept, and everyone faces the same price at the same time, she said.

But for traditional car companies, consumers gets different quotes from the dealership.

"So you actually don't know if your price is the lowest or not at all, and you don't know what price other people are buying at. Is that fair for the consumer?" She asked.

Many consumers in China may not be used to this kind of complete transparency from Tesla, but as people grow to understand why Tesla is going this way, they may grow accustomed to it after that, Tao said.

Although the price cut sparked discontent among owners who had recently received deliveries, the more attractive prices apparently boosted deliveries.

On the day of the price cut, Tesla delivered more than 10,000 vehicles in China, ifeng.com reported earlier today, citing a mid-level executive at the EV maker.