By on July 28, 2021

This year has already seen price increases across the board, thanks largely to the supply crisis created in the wake of our response to the pandemic. As it turns out, shutting down the global economy wasn’t ideal for maintaining business as usual and nobody in charge seems all that interested in returning things to normal. Automotive prices have become particularly troublesome, as manufacturing costs have risen and a deficit of product has made this a seller’s market.

Tesla has been raising rates all year, particularly on its higher-volume models. By June, price bumps had become so common with the brand that CEO Elon Musk had to address the matter. He blamed industry-wide supply chain pressures, noting that raw materials had become particularly costly. While a totally rational explanation, there are problems with it when you realize those end-of-line price hikes aren’t being extended to China.

Long Range, dual-motor variants of the Model Y and Model 3 just had $1,000 added to their MSRP — leaving the crossover to start at $53,990, with the sedan coming in at $49,990. While U.S. customers do have access to a cheaper Model 3, that’s not the case for the Model Y and the car has seen its sticker increase by $4,000 since February. However, this pertains specifically to the U.S. market, as China has not experienced a similar uptick in vehicle pricing.

There is a laundry list of reasons for this. Tesla is focused on growth in China and recently completed Gigafactory 3 in Shanghai where it can manufacturer the Model 3 and Y for less money. It also has substantially more direct competition there and has endeavored to keep prices down to maintain a competitive edge. China accounts for almost half of all EVs sold on planet Earth, whereas the United States represents around 17 percent of the total market.

While a recent analysis from Reuters confirmed that prices have been raised in China, the frequency and amount aren’t equitable to what’s currently being endured by the United States.

From Reuters:

Tesla raised prices for Model Y Long Range at least six times in the United States this year, bumping by $5,500 [since Janurary] to $53,990. In China, the world’s most valuable carmaker raised prices of the Model Y SUV and Model 3 sedan only once this year.

The Model Y version a price tag [sic] of 276,000 yuan ($42,394). The company also has launched promotional campaigns in China such as loan offers.

“I think Tesla is looking to be as competitive as it can be in China. Lower prices will be a part of that aggressive market positioning,” Roth Capital Partners analyst Craig Irwin said. “There is a very large difference in battery prices in the U.S. and China, as well as local vehicle manufacturing costs.”

That’s true of most automakers. Vehicles are simply cheaper to produce in China and companies frequently equip them with hardware that’s a little easier on the corporate pocketbook. Some Chinese-made Tesla products use a different (see: cheaper) battery chemistry from CATL and have been alleged to offer lesser fit and finish than their U.S. counterparts. But the company’s quality control has always been a little erratic and it has de-contented Western models in the past by removing some of the sensing equipment used for the Autopilot suite.

Granted, pricing does come down in practically every market once you’ve accounted for government subsidies. But it still feels like other markets are taking the hit so Tesla can keep plugging away at making sure it’s a success in China.

On the one hand, it’s difficult to chide Tesla for engaging in the same business practices we’ve seen legacy automakers adhere to for years. Everyone wants a shot at China. But it’s different when the automaker’s entire lineup benefits heavily from the current regulatory environment and the business is propped up by government subsidies. Though it may be better to take that up with the people who enabled it, rather than those who have managed to exploit it.

We’re not really sure what’s fair or prudent here. While China is a massive country with an assumed growth potential that makes investors salivate, Tesla’s share of the market declined from 18 percent in 2020 to 11 percent in the second quarter of 2021. Despite losing some ground in the United States during the same timeframe, Teslas still represent the overwhelming majority of domestic EV sales.

[Image: Image: Helloabc/Shutterstock]

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21 Comments on “Tesla Keeps Raising Prices for U.S. But Not China...”


  • avatar
    Chocolatedeath

    “some of them allegedly offer a cheaper fit and finish”
    I haven’t been in a plaid edition of their newer products. But I have been in everything else they make. if the fit and finish is worse than what we already get I just don’t understand how.

    • 0 avatar
      CaddyDaddy

      “I haven’t been in a plaid edition of their newer products. But I have been in everything else they make. if the fit and finish is worse than what we already get I just don’t understand how.”

      Never underestimate of the ability of Fremont Assembly from producing the most
      pathetic slapped together automobiles in the USA. (NUMMI co-venture not included). Fremont is just reverting to its old ways.

    • 0 avatar
      hardline

      Exactly its been pretty bad in murica already

  • avatar
    jmo

    When do we get the Tesla blowout earnings post?

    • 0 avatar
      mcs

      Notice how the poster is deliberately avoiding saying anything about the profit. Also, he describes the removal of the radar as “decontenting” when in fact there is not decontenting because there was no functionality lost by removing the radar.

      Now, if they really wanted to write something negative, there are Musk’s comments about “self-driving”. If they were looking for something negative, which they were, that’s a better topic than this useless post.

  • avatar
    FreedMike

    “…nobody in charge seems all that interested in returning things to normal.”

    Let me correct that for you, Matt…”nobody ***who used to be in charge*** seems all that interested in returning things to normal.” I’m sending you a Venmo request for $1.99.

    If we want to get back to normal, that’s easy – unless you’re too young, or too sick, EVERYONE should stick their right shoulder out and get vaccinated already. No need for shutdowns, distancing, masks, or all the other inconveniences – I mean, Jackbooted Thug Tactics – that are needed to control the pandemic without vaccines.

    Simple, no? But a very large portion of the the folks who pine for the days when the guy who used to be in charge WAS in charge seem to think vaccinations are yet another Jackbooted Thug Tactic, despite the fact that their Number One Guy was instrumental in getting the vaccines developed so quickly in the first place. Go figure.

    • 0 avatar
      28-Cars-Later

      “No need for shutdowns, distancing, masks, or all the other inconveniences ”

      You’re right there is no need, the plandemic is over and they won without any real resistance. I wish it was just Dim/Rethug politics as usual now, but they want more. They want Gattaca at best and 1984 (or darker) at worst, and there is *no need* for either. These c**ksuckers are going for broke and they certainly appreciate those who cite the false Red/Blue team paradigm as if a global societal change wasn’t just initiated at great expense. I hope I am wrong and this all just fades away, but I wouldn’t hold my breath.

      • 0 avatar
        Ol Shel

        Ah, the ‘Dim/Thugs’ who are also wimpy pinkos who can’t do anything right, according to your side.

        You’ll say absolutely anything in order to soothe your tender feelings. You’re completely incapable of absorbing facts. All that nonsense your side spouted about what Obama was going to do to you…and NONE of it happened. Yet, you believe in your feelings.

  • avatar
    schmitt trigger

    Simple economics.
    If raising prices does not reduce the demand, you keep raising them until the demand abates.

  • avatar
    indi500fan

    It was pretty obvious from this weeks Tesla earnings call that Musk has lost personal interest in the vehicle biz and will concentrate on SpaceX. That may be good or bad for Tesla vehicles…we’ll see.

  • avatar
    SCE to AUX

    “nobody in charge seems all that interested in returning things to normal”

    In an article about car prices in China being affected by supply chain issues, exactly what would normalize the supply chain and pricing – and who would do that – the Illuminati?

    “Granted, pricing does come down in practically every market once you’ve accounted for government subsidies. But it still feels like other markets are taking the hit so Tesla can keep plugging away at making sure it’s a success in China.

    “On the one hand, it’s difficult to chide Tesla for engaging in the same business practices we’ve seen legacy automakers adhere to for years. Everyone wants a shot at China. But it’s different when the automaker’s entire lineup benefits heavily from the current regulatory environment and the business is propped up by government subsidies.”

    a) First you explain the reason for the selective price increases, but then you don’t like the answer.

    b) Any auto mfr is free to ‘benefit from the current regulatory environment’; they’re just late to the party. Suddenly everybody has EV fever.

    c) Exactly how is Tesla propped up by government subsidies?

    And when will we see an article on other mfr’s pricing in China vs the US?

  • avatar
    probert

    The key thing in here is batteries, the most expensive part of an EV: China makes most of them, and they just put em on a truck and drop them off. Tesla has long term contracts with suppliers – so probably costs are fixed. Also, Tesla uses a lot of cheaper Iron based batteries in China, and until 2022, they can’t be exported due to Chinese patent rights.

  • avatar
    Kendahl

    Given that all the other automakers are raising prices, usually through their dealerships, using the shortage of vehicles as their excuse, can you blame Tesla for wanting their share of the cream? I hear the wait for a Model Y is three months.

  • avatar
    Ol Shel

    Patriots lose all allegiance when there’s a buck to be made. Elon’s not ‘woke’ to treating his fellow Americans fairly, either.

  • avatar
    Master Baiter

    This is nothing new. DVDs have region codes so that the movie studios can charge us rich Americans $20 for a DVD that they sell in Asia for $3.

  • avatar
    tsarcasm

    All prices are up, the FED keeps printing money. It’s called inflation.

  • avatar
    random1

    I went to a Tesla showroom a couple of weeks ago, and the salesman was pretty candid saying “we expect to raise prices since we’re expecting to get federal tax credits again”. Not sure he’s right (I do think Biden admin will expand the credits, esp since GM wants them too), but if they have demand without the $7500, they might as well try to grab some of it….

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