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China EV war: Tesla’s US$289 increase signals end of price cuts, industry observer says
- Price increase ‘a gesture’ telling buyers that Tesla will not cut prices any more, Shanghai-based EV data provider CnEVpost’s Phate Zhang says
- Entry level Model 3 will cost 231,900 yuan, while the basic Model Y now starts at 263,900 yuan
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Tesla is increasing the price of its China-made electric vehicles (EVs) amid a plunge in profits in mainland China, four months after it sparked a price war among makers of new-energy vehicles (NEVs) in China by offering deep discounts on its cars.
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The US carmaker has raised the prices of all variants of the Model 3 and Model Y made in Shanghai by 2,000 yuan (US$289) effective from Tuesday. The entry level Model 3 will cost about 0.9 per cent more at 231,900 yuan, according to an updated price list on Tesla’s website in China. The basic Model Y now starts at 263,900 yuan.
On January 6, CEO Elon Musk cut the prices of every variant of the Model 3 and Model Y by between 6 per cent and 13.5 per cent. The cheapest Model 3s were made cheaper by 36,000 yuan each, or 13.5 per cent, and cost 229,900 yuan.
“It is more like a gesture telling buyers in China waiting on the sidelines for more discounts that Tesla will not cut prices any more,” said Phate Zhang, founder of Shanghai-based EV data provider CnEVpost.
The price rise comes after Tesla posted its lowest quarterly gross margin in two years in April, missing market estimates as net profit fell by nearly a quarter year on year to US$2.51 billion. The carmaker was hit by higher raw material, logistics and warranty costs, as well as a production ramp-up of its 4680 battery cells, according to a filing made to Nasdaq. Shares of the Texas-based carmaker have slumped by 16.1 per cent in the past month.
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