Tesla Model Y Rear-Wheel-Drive units in China received minimal price increases of less than a percentage point this week.
Tesla increased the price of the base Model Y trim level from 259,900 yuan ($38,167.27) to 261,900 ($38,460.97). It is only a 0.8 percent increase in price and is relatively minimal, but still a slight uptick.
The price increase follows a sharp rebate on Model 3 and Model Y vehicles in China at the beginning of the year. In early January, Tesla cut prices of the Model 3 sedan and Model Y crossover by between 6 and 13.5 percent, making them vastly more affordable for consumers.
The company made the same cuts in the United States, with the biggest discounts coming on the Model Y, with reductions by as much as $13,000. After the entire U.S. lineup of Model Y trims was added to the IRS’s list of vehicle qualifying for federal tax credits in early February, Tesla pushed prices up slightly.
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The adjustments to pricing in both the Chinese and U.S. markets could help Tesla level out some potential profitability losses from the reduced prices. Tesla has among the best vehicle profit margins in both China and the United States. The slight uptick in price could help soften investor worries by making slightly more per car.
Tesla builds its cars for the Chinese market in Shanghai at its dedicated production facility known as Gigafactory Shanghai. While this plant builds cars for Chinese customers, it is also the company’s export hub for customers in other markets, including Europe and Australia.
The Shanghai plant was a major contributor to some of Tesla’s production issues last year, as the company said its manufacturing and delivery challenges in 2022 “were largely concentrated in China.” This is no indication of softening demand, however, as Tesla has still maintained the lead in sales of fully-electric models.
The factory builds more than 750,000 vehicles per year. It is a major contributor to Tesla’s overall production figures, accounting for more than 50 percent of the company’s global deliveries in the past two years.
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