Tesla to increase vehicle prices in the US
In the same week, the EV car manufacturer lowers its sale prices in China.
Tesla is pursuing two completely different strategies for its US and China operations after announcing its recent "profit overshoot". In the United States, the automaker is raising prices to increase profit margins, while in China it is keeping prices constant, which is likely an attempt to increase demand, Reuters reports. So far, Tesla has raised prices for its Model 3 and Model Y in the US about a dozen times this year, "the report said. At the same time, the company has also launched an affordable version of the Model Y in China. Tesla is not only facing increased control by the citizens and the government in China, but is also running head-on against a wall of Chinese EV competitors. Bernstein's Toni Sacconaghi has challenged demand in China following the introduction of the lower-priced Model Y. He said the model could make sustainable margin improvement difficult. "Chinese car owners were" less enthusiastic and less likely to repurchase than owners in the United States and Europe, "according to a recent Bernstein poll. Craig Irwin, an analyst at Roth Capital Partners, told Reuters, "I think Tesla wants to be as competitive as possible in China. Lower prices will be part of this aggressive market positioning. There is a huge difference between battery prices in the US and China as well as local vehicle manufacturing costs. " Nicholas Hyett, an analyst at Hargreaves Lansdown, added, "It wasn't that long ago that the company cut prices in the US to gain economies of scale and maximize profitability, and it seems we are now also see in China. " Gene Munster of Loup Ventures confirms that the lower prices in China could have "a lasting effect" for the company in that country: "Teslas cost, on average, three times as much as a typical electric car made in China, so prices must be lower than the ones in China US to be competitive. Tesla prices in China will be below the rest of the world for the next decade. " Tesla's market share in China has fallen to 11% of the market for battery-powered electric vehicles. China accounts for 44% of the global electric vehicle market.