After Tesla China raised the price of the Model Y high-performance version at the end of October, it plans to increase the prices of the Model 3 and Model Y long range versions.
On November 8th, Tesla confirmed to First Financial reporters that Tesla China will adjust the prices of the Model 3 and Model Y long range versions on November 9th. The specific increase is currently uncertain, and there may be further price increases for the standard and extended versions in the future. Tesla is not only raising prices, but vehicle referral rewards are also starting to decline.
In fact, there are early signs of Tesla's price increase. On October 27th, the price of the Tesla Model Y high-performance version was increased by 14000 yuan, with an adjusted price of 363900 yuan. At the same time, the price of the Model Y Long Range Edition in the North American market has also increased by $500.
At the beginning of this year, Tesla's significant price reduction of domestically produced Model 3 and Model Y sparked a fierce price war in the market, involving almost all participants in the new energy vehicle market. Price reduction and configuration increase have become the main theme of the car market this year.
Tesla's sustained high sales in China have also made it a target for many car companies to compete for food, including the recently launched Zhiji LS6 and Jiyue 01, both of which are directly targeting Model Y. These models have also offered competitive prices, with the Zhiji LS6 starting at 214900 yuan and Jiyue 01 starting at 249900 yuan, both of which are lower than the Model Y's starting price of 263900 yuan.
Why did Tesla choose to go against the trend in the price war?
Industry insiders told reporters that one of the reasons for Tesla's price increase is that supply is in short supply. The actual annual production capacity of the Shanghai Super Factory has expanded from 750000 vehicles/year in the second quarter to over 950000 vehicles/year in the third quarter. However, with the release of the updated Model 3 and Model Y evolution versions, Tesla's demand is also increasing. According to data released by the China Federation of Automobile Manufacturers on November 8th, Tesla China's wholesale sales in October were 72115 vehicles, second only to BYD (300000 vehicles). Tesla's weekly sales from October 30th to November 5th exceeded 14000 units, a year-on-year increase of 39%.
According to information on Tesla's official website, the expected delivery times for the updated Model 3 and Model Y are both 2 to 6 weeks.
In addition, Tesla's global price cuts since the beginning of this year have greatly affected its profitability. Tesla's third quarter financial report shows that its total revenue in the third quarter was approximately 23.4 billion US dollars (approximately 171.2 billion yuan), a year-on-year increase of 9%, lower than Wall Street's expectations and the slowest year-on-year growth rate in three years; The net profit was 1.853 billion US dollars (approximately 13.9 billion RMB), a year-on-year decrease of 44%, and there was also a significant decline compared to the first two quarters of this year. Affected by the continuous price reduction, Tesla's gross profit margin further declined in the third quarter of this year, reaching a four-year low of 17.9%. Compared to the gross profit margin of 18.2% in the second quarter of this year, it decreased by 0.3 percentage points, and compared to the gross profit margin of 25.6% in 2022, it decreased by 7.7 percentage points.
Tesla CEO Elon Musk stated during the third quarter earnings conference call that Tesla will still strive to lower the prices of its cars. Nevertheless, the continued deterioration of major financial indicators may have forced Tesla to choose price hikes to "revive".