Tesla raises mainland China price of Model Y’s basic version by just US$294, remains cautious about sales in world’s largest EV market

US electric-vehicle (EV) maker Tesla raised the mainland China price of the Model Y’s basic edition by 2,000 yuan (US$294) on Friday, far less than the amount by which it recently raised prices in the United States.

The increase, which follows two rounds of huge across-the-board price cuts in late October and early January, was announced by the carmaker on its China website. An entry-level Model Y assembled at the Gigafactory 3 in Shanghai will now cost 261,900 yuan, compared with 259,900 yuan previously. The prices of other Shanghai-made Model 3 and Model Y versions stay unchanged.

“A price hike shows that Tesla is confident about its China sales,” said Eric Han, a senior manager at Suolei, an advisory firm in Shanghai. “But the small rise compared to a price increase of US$1,000 to US$1,500 in the US means that Tesla is still striving to bolster deliveries in the world’s largest EV market.”

Last week, Tesla increased the price of its US-made Model Y long-range edition by US$1,500 to US$54,990, and increased the price of the high-performance version by US$1,000 to US$57,990.

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Tesla China would not comment on its price adjustment, when approached by the Post. In January, Grace Tao, Tesla’s head of communications and government affairs in China, said on microblogging site Weibo that the carmaker adjusts prices of its locally built vehicles in China frequently, based on production costs.

Tesla is the runaway leader in China’s premium EV segment. It handed over 439,770 vehicles to mainland buyers in 2022, up 37.1 per cent year on year.

However, since late 2022, mainland motorists have been shifting towards cheaper EV models, unnerved by worries about job prospects and wages. As a result, the Texas-based carmaker delivered 26,843 EVs in mainland China in January, down 36 per cent from 41,926 cars in December, but up 38.8 per cent from the same period in 2022.

The month-on-month decline in deliveries came after Tesla’s huge discounts to mainland customers. On January 6, Tesla slashed prices of its Model 3 and Model Y EVs by as much as 13.5 per cent after recording a 44 per cent month-on-month drop in deliveries in December, according to data from the China Passenger Car Association.

The January price cuts followed discounts of up to 9.4 per cent announced on October 24 last year. As a result, the prices of Tesla’s EVs in China have fallen to their lowest levels since the first car rolled off its Shanghai production line in December 2019.

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Tesla largely reduced output in Shanghai in December and January as demand for the two models declined.

But Reuters reported this month that Tesla would ramp up production in Shanghai in February and March amid surging orders for Model 3s and Model Ys after the price reductions. The carmaker plans to produce more than 80,000 cars a month, on par with September, when it made 82,088 units, the report said.

On January 12, UBS analyst Paul Gong said that the possibility of Tesla raising prices later this year when sales rebound could not be ruled out.