Tesla is raising prices for Model 3 and Model Y in mainland China again as demand significantly outstrips supply and the manufacturer continues to grapple with component shortages despite strong production figures.
Tesla again raised the prices of its Shanghai-made cars, prompting analysts to speculate that the move was aimed at bridging the widening gap between its production capabilities and ever-growing demand, although global component shortages played a significant role in this.
The Texas-based automaker announced today that its base-level Model 3, produced at Giga Shanghai, will cost RMB 265,652 ($41,678) after subsidy—up RMB 10,000, or 3.9%. The Model 3's current price is still about 11% lower than the RMB 299,050 price tag when the first batch of Shanghai-made vehicles was delivered to mainland buyers in January 2020.
The base version of the Model Y SUV received a price increase of RMB 21,088, or 7.5%, to RMB 301,840. The standard version of Model Y, equipped with a lithium phosphate battery (LFP), was priced at RMB 276,000 when it first rolled off the assembly line in July this year. After the recent price increase, the car is no longer eligible for the government subsidy because Beijing only provides it for new energy vehicles (NEV) at prices below RMB 300,000. According to the overall plan, China will cut its NEV subsidies by 30% next year, the finance ministry said. After 2022, NEV purchases will not be subsidized at all.
“Tesla’s increasing popularity in China and Asia has resulted in a widening gap between its capacity and demand for its vehicles,” said Eric Han, a senior manager with Shanghai-based business advisory Suolei. “The higher prices are aimed at curbing consumer demand and easing production woes,” he suggested.
Tesla delivered 250,141 vehicles to mainland Chinese customers from January to November, up 120% from the same period last year. This strong performance is an excellent result of the company, which is expanding production despite continuing global component shortages.
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.