Tesla has raised prices on its Model 3 and Model Y electric vehicles in China, marking the first round of price hikes with more expected to come. The move reflects strong demand amid supply chain constraints.
On November 14th, the rear-wheel drive Standard Range Plus version of the Model 3 saw its price lifted by 15,500 RMB to 261,400 RMB, equivalent to around $206 USD.
Meanwhile, the rear-wheel drive Model Y Long Range experienced a 25,000 RMB ($344 USD) price increase to 266,400 RMB.
Tesla sales representatives confirmed the authenticity of the price hikes to Chinese automotive media outlets. They indicated these adjustments are intended to “correct” pricing after the reductions implemented in August.
With booming sales volume and limited production capacity, Tesla is under pressure to increase prices to match demand and cover rising manufacturing costs, salespeople hinted additional price raises are likely in the future.
In China, both the Model 3 and Model Y currently face delivery wait times of 2-9 weeks, signaling high demand and low inventory. As the Giga Shanghai supplies Tesla refreshed Model 3 to multiple Asia-Pacific and European markets, extended wait times may continue.
The price hikes apply specifically to the most affordable rear-wheel drive configurations of Tesla’s two high-volume models, by raising entry-level pricing, Tesla aims to steer more orders toward the higher-margin performance variants.
Since the Giga Shanghai facility already captures a sizable share of the local luxury EV market, Tesla possesses substantial pricing power. As the brand continues successfully penetrating the mainstream segment, it is leveraging that advantage to boost revenue and margins.
This represents a normalization of Tesla’s China pricing strategy compared to generous discounts offered earlier this year, also prepares the way for new model launches like the upcoming $25,000 compact EV.
As Tesla rises to even greater scale in 2024 and beyond, strategically optimizing pricing will be crucial to sustaining profitability on its journey to reach full mainstream adoption.
For now, Chinese consumers eager to join the Tesla ecosystem will need to budget more for base Model 3 and Model Y versions. But for loyal fans of the brand, the price hikes are unlikely to dampen demand or loyalty.