Tesla Model Y Price Increase in China Starting Next Month... Chinese Companies 'Phew~'

Starting from the 1st of next month, Tesla announced a slight price increase for the China-made Model Y, bringing relief to local manufacturers. This comes with expectations that the long-standing price-cutting competition will end, potentially stimulating consumer market entry.

On the 20th, Tesla announced that the local selling price of the China-made Model Y will increase by 5,000 yuan (approximately 930,000 KRW) from April 1st. According to Chinese economic media Caixin, the preferential policy of an 8,000 yuan subsidy for car insurance will also end at the end of this month.

[Image source=AP Yonhap News]

Since early last year, Tesla has adjusted its sales prices several times, triggering price competition in the electric vehicle market. Earlier this year, it lowered prices again and even offered additional effective discounts through insurance subsidies. In January this year, the price of the Model 3 rear-wheel-drive version was reduced by 15,500 yuan, the long-range model by 11,500 yuan, and the Model Y saw reductions of about 7,500 yuan and 6,500 yuan respectively.

However, this price increase is smaller than the previous price cuts and is also minimal compared to price adjustments overseas. Earlier, Tesla raised the price of the Model Y rear-wheel-drive and Long Range trims by $1,000 (approximately 1.34 million KRW) each on the 1st of this month, and on the 16th announced price increases of 2,000 euros (approximately 2.9 million KRW) in Europe and $1,000 in North America.

Chinese electric vehicle companies seem to breathe a sigh of relief at Tesla's move. The price cuts by Tesla had triggered intense price competition, worsening profitability, and consumers delaying purchases while waiting for further discount promotions, creating a vicious cycle. Currently, most Chinese EV companies are operating at a loss, with only BYD and Li Auto making profits.

Caixin explained, "By announcing the price increase policy in advance, Tesla may stimulate market entry among some consumers who were waiting for price cuts," adding, "This could provide some breathing room for other companies."

Meanwhile, Tesla's sales volume in the Chinese market continues to show a relatively stable trend. From March 1 to 17, it sold 31,000 vehicles, ranking first among luxury brands.