Tesla's Model 3 price cut boosts its Chinese suppliers

After a weekend brewing, the news that American automotive and energy company Tesla Inc cut the starting price for its China-made Model 3 sedans by 16 percent to 299,050 yuan (42,919 U.S. dollars) after the Chinese government's 25,000-yuan subsidy, boosts the stocks prices of its Chinese suppliers on Monday.

Tesla Inc will deliver its first China-made Model 3 sedans to the public this Tuesday, announced at an event at its first offshore Gigafactory on last Thursday.

The Tesla Index, consisting of 31 constituent stocks of Tesla's supply chain in China, surged up by 5.9 percent on Monday, with four stocks rise to daily limits after the market closed, according to financial data services provider Wind.

"A Tesla with the price tag of lower than 300,000 yuan is believed to be very attractive to Chinese car buyers," SCMP cited Gao Shen, a Shanghai-based independent manufacturing sector analyst, as saying, "The price cut is set to fuel competition in the country's high-end electric vehicle market."

Appliances parts maker Zhejiang Sanhua Intelligent Controls Co., Tesla supplier, saw its shares rise to the daily limit and a record high, though bounced back with 6.83 percent of increase when trading ended.

Stocks of other suppliers, including Ningbo Tuopu Group Co. and Ningbo Xusheng Auto, also rose to near the daily limit or to multi-year highs after Monday's trading.

Deliveries of China-made Tesla Model 3's to Chinese customers will officially start Tuesday. The California-based company also reported a new record for quarterly global deliveries of 112,000 units in the final three months of 2019.