Tesla raises prices of China-made Model 3 and Model Y electric vehicles amid shortage of automotive chips and parts

Tesla raised the price of its entry-level Model 3 by 1.9 per cent, or 4,752 yuan, to 255,652 yuan each
The Model Y was marked up by 1.7 per cent to 280,752 yuan, Tesla announced, without saying why it’s raising the price

Tesla

Daniel Renin Shanghai

Published: 5:30pm, 24 Nov 2021

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Tesla raised the price of its entry-model electric car for the second time in five days, and marked up its sports-utility vehicle, as a global shortage of automotive chips forced the market leader in the world’s largest automobile market to make a U-turn on almost two years of discounts.

The sticker price of Tesla’s rear-wheel-drive Model 3, with a driving range of 556 kilometres (345 miles), went up by 1.9 per cent, or 4,752 yuan, to 255,652 yuan (US$39,992) after discounts, the carmaker said on Wednesday. Five days earlier, Tesla raised Model 3’s price by 6.4 per cent.

The price of the Model Y, unveiled in January during a surprise launch, was marked up by 1.7 per cent, or 4,752 yuan, to 280,752 yuan, Tesla announced, without saying why it raised its prices. The prices of Shanghai-made Teslas with higher specifications or driving range remain unchanged.

The price increases on two of Tesla’s bestselling models could give competitors that are already snapping at the carmaker’s heels the opening they need to catch up with what has until now been the bellwether marque in the world’s largest market for electric cars.

Tesla’s first Model Y electric sports-utility vehicles at a showroom in the Zhejiang provincial capital of Hangzhou, on January 4, 2021. Photo: Costfoto/Barcroft Media via Getty Images.

“A small price increase could deter some budget-sensitive Chinese drivers from ordering its cars as a way of easing pressure on the Shanghai factory,” said David Zhang, a researcher for the automotive industry at the North China University of Technology. “Tesla has the tradition of adjusting prices to strike a balance between supply and demand.”

Tesla began to reverse course last week on the 21 per cent of discounts it had given out over nearly two years on the electric cars rolling out of its Gigafactory in Shanghai. When Tesla’s Lingang plant, the first wholly foreign-owned car assembly in China, began operating in January 2020, the basic version of Model 3 was priced at 299,050 yuan.

Inside Tesla’s Gigafactory in Shanghai on November 20, 2020. Photo: Xinhua

That had progressively become cheaper as production ramped up to 300,000 cars a year, enabling Tesla to outsell its closest competitor five to one. At its peak in September, Tesla delivered more than 56,000 vehicles in China, double the total deliveries by NIO, Xpeng and Li Auto.

Starting from November 6, the USB ports in the front central consoles of the Shanghai-made Model 3s and Model Ys could only be used for charging, not for data transfer due to chip shortage, Tesla said last week in response to customers’ queries.

China is set to report deliveries of 2.4 million new-energy vehicles – which comprises pure electric, plug-in hybrid and fuel-cell cars – in 2021, more than double last year’s 1.17 million units, according to China Passenger Car Association forecasts.

Tesla began taking orders for its Chinese-made Model Y vehicles from the beginning of this year, fitting the standard-range sport-utility vehicle (SUV) with a lithium iron phosphate (LFP) battery pack.

Apart from Model 3s and Model Ys that are assembled in Shanghai, Tesla also sells imported Model S and Model X vehicles in China.

Responding to a question on Twitter on Sunday, Tesla’s chief executive Elon Musk said the company’s new Model S Plaid vehicle, reportedly priced at US$129,990, could be launched in China around March next year. The car has a 520-mile (837km) range and can reach speeds of up to 200 miles per hour.

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