Tesla Raising US Prices To Keep Them Low In China

Electric Vehicles / Comments

This won't at all be controversial, right?

Since the start of the year, prices for the Tesla Model 3 and Model Y have been consistently rising. The Model Y Long Range has seen its price increase an astonishing six times so far in 2021, going from $48,490 to the current $53,990. Tesla has never provided an explanation why this is happening but many assumed (and Elon Musk even said) that it had to do with supply issues. Because Tesla lacks a PR department it's impossible to ask specific questions and receive answers. Musk might reply to a question on Twitter, at best.

Reuters put a team of analysts to work in order to figure what's going on here and their findings make for interesting reading.

2017-2021 Tesla Model 3 Driving Front Angle Tesla
2017-2021 Tesla Model 3 Driving Back View Tesla
2017-2021 Tesla Model 3 Dashboard Tesla

The main reason for US market price increases and the removal of features like lumbar support and a radar sensor is so that they can be lower in China, the world's largest EV market. Unlike in the US, Tesla faces a lot more Chinese domestic competition who sell cheaper EVs. Tesla has also faced recalls, angry and sometimes very vocal customers, and government pressure it's not accustomed to in America.

The analysts found that Chinese Tesla owners are generally less enthusiastic about the product compared to their US counterparts. Furthermore, they're less likely to be repeat customers, unlike in the US as well as Europe. Tesla is also working harder to attract Chinese buyers. That aforementioned Model Y is listed at 276,000 yuan, or about $42,400. The carmaker even aggressively advertises loan offers, something it doesn't do elsewhere.

2020-2021 Tesla Model Y Forward View Tesla
2020-2021 Tesla Model Y Lateral View Tesla
2020-2021 Tesla Model Y Back Seats Tesla
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So, is the reason for Tesla's US market price bumps to help keep them lower in its most important up-and-coming market? Possibly, but it's also important to consider that battery prices and labor costs are lower in China and this is expected to remain the case for at least the next decade. Tesla is embarking on a strategy of cutting costs and boosting margins in the US while keeping prices stable in China because boosting sales there is vital.

Tesla has a cult-like following in North America and Europe and there are several brand-dedicated websites that aren't always critical enough when it comes to the company's decisions. That's not the case in China and because of this Tesla must work harder there.

2021 Tesla Model S Plaid Driving Front Angle Tesla
2021 Tesla Model X Plaid Rear Angle View Tesla
2021 Tesla Model X Plaid Top View Tesla
Source Credits: Reuters

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2017-2021 Tesla Model 3 Driving Front Angle
2021 Tesla Model S Plaid Driving Front Angle
2021 Tesla Model X Plaid Rear Angle View
2021 Tesla Model X Plaid Top View
2020-2021 Tesla Model Y Back Seats
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