Tesla China’s recent price increase was due to rising costs: report

Key Points

• 📈 Tesla China attributes recent price increase for Model 3 Long Range and Model Y Long Range to rising costs.
• 🚗 The electric vehicle maker mentions that price fluctuations are normal and can be influenced by changes in production costs.
• 💰 Tesla China’s recent price hike puts the Model 3 Long Range at RMB 297,400 ($40,819) and the Model Y Long Range at RMB 302,400 ($41,507) before options.
• ⏰ The slight adjustment in prices may hint at a strategy to encourage quick purchases by creating a sense of urgency among consumers.
• 🌐 China is a crucial market for Tesla, with strong sales potentially supporting the company’s ambitious global goals of reaching 1.8 million vehicles this year and 20 million vehicles by the end of the decade.
• 📈 Industry insiders speculate that Tesla China’s price increase could be a move to improve profit margins amid perceived profit pressure.
• 🔄 Unlike previous quiet adjustments, Tesla China openly shared details about the price increase on social media and with local news outlets, indicating a shift in the company’s strategy for this round of pricing adjustments.

Tesla China has provided some explanation about its recent price hike for the Model 3 Long Range and Model Y Long Range. As per the electric vehicle maker, the recent price cuts are due to cost increases. 

The EV maker’s comment was reportedly shared with local media outlet Elephant News, which quoted a Tesla customer service staff. “It is normal for vehicle prices to rise and fall. If the cost drops, then the price may come down,” the Tesla staff stated. It should be noted that Tesla has reduced its vehicles’ prices this year multiple times. 

Tesla China’s recent price increase has resulted in the Model 3 Long Range starting at RMB 297,400 ($40,819) before options. The Model Y Long Range, on the other hand, now starts at RMB 302,400 ($41,507) before options. The two vehicles previously started at RMB 295,900 ($40,615) and RMB 299,900 ($41,164) before options, respectively. 

While Tesla China staff may note that the recent price increase is due to rising costs, the small adjustment in the two vehicles’ prices could suggest that the electric vehicle maker was looking to motivate customers to purchase the Model 3 and Model Y quickly. The idea of an impending price increase, after all, could provide a sense of urgency for consumers. 

Industry insiders, for their part, have noted that Tesla China’s price increase may be a way for the electric vehicle maker to improve its margins. “Tesla’s price increase may be because it is currently under great profit pressure and is eager to restore gross profit margins,” insiders told the local publication.

Tesla China’s strategy for this round of price increases to the Model 3 and Model Y is quite interesting. Typically, Tesla’s price adjustments in China are implemented quietly, with an update to the company’s website and a few posts on social media. This time around, however, Tesla China staff posted about the price increase on social media days before it was implemented. Details were also provided to local news outlets. 

China is an important part of Tesla’s global operations. Being the world’s largest EV market, strong sales in China could provide Tesla with enough tailwinds to allow the company to achieve its ambitious goals. This year, after all, Tesla is looking to hit 1.8 million vehicles, and by the end of the decade, the company is looking to achieve 20 million vehicles.