Tesla has recently become the "reverse king" of the automotive industry, continuously raising prices for popular models.
On November 14th, Tesla's official website in China showed that the starting prices of the Model 3 and Model Y rear wheel drive versions have been increased. The updated Model 3 rear wheel drive version has a price increase of 1500 yuan, with an adjusted starting price of 261400 yuan. The Model Y rear wheel drive version has a price increase of 2500 yuan, with an adjusted starting price of 266400 yuan.
Just a few days ago, the Model 3 Long Range facelift and Model Y Long Range models also increased their prices by 1500 to 2500 yuan, respectively. After this round of price adjustment, all models of the Model 3/Y series have experienced price increases. Behind the price increase is Tesla's "oversupply", and the overall pick-up cycle of Model 3/Y has been extended.
Tesla's "toothpaste squeezing" price increase
This round of Tesla's price increase is not a "one-step solution", but rather a batch process.
On October 27th, the Model Y high-performance version underwent a price increase of 14000 yuan.
On November 9th, the Tesla Model 3 and Model Y Long Range versions increased their prices one after another. The former's price increased by 1500 yuan, while the latter's price increased by 2500 yuan. Unlike before the previous price adjustment, there was a price increase forecast, not a "sudden price adjustment".
Some netizens believe that Tesla's "toothpaste squeezing" price increase is creating a sense of tension that "car prices have been rising", allowing consumers to place orders and pick up their cars as soon as possible. Analysts have told reporters that Tesla, with its strong brand influence and product strength, has "independent pricing power", allowing it to "reverse cycle adjust prices" without following the trend.
However, during the third quarter financial report conference call, Tesla CEO Elon Musk stated that Tesla will strive to lower car prices, which is inconsistent with its recent price adjustment strategy. Musk said, "I am concerned about the high interest rate environment we are in. Car buyers are concerned about how much money they need to pay back each month. If interest rates remain high or even higher, it will be much more difficult for people to buy cars
The importance of cost cannot be overemphasized... We must make our products more affordable so that people can afford them. Reducing the cost of Tesla cars is like a 'game of power, just a few cents', "Musk added.
Overall, although price reduction is Tesla's "overall direction", it is Tesla's consistent characteristic to flexibly adjust prices based on supply and demand relationships and costs. Whether the price of cars can ultimately decrease depends on whether Tesla's manufacturing costs can continue to decline.
During the third quarter financial report conference call, Tesla Chief Financial Officer Vaibhav Taneja stated that Tesla's raw material costs per car in the third quarter decreased to $37500 (approximately RMB 2.743 billion), a decrease of approximately $2000 compared to the previous quarter. The upgrade of the production line in the third quarter will further reduce Tesla's single car costs. He emphasized that Tesla will focus on reducing costs and investing in the future in the next few years of development.
The production capacity of the Shanghai factory is "in short supply"
In the short term, there is also a factor behind Tesla's price increase that production capacity is in short supply. According to Tesla China's official website, the delivery cycle of the Tesla Model 3 Long Range Renewal has been increased to 6-9 weeks, and the Model Y Long Range Edition has been increased to 6-8 weeks.
In the third quarter of this year, the production capacity of Tesla's Shanghai super factory increased to 950000 vehicles per year, continuing to grow from 750000 vehicles per year in the second quarter. At present, the automation rate of Shanghai's super factory has reached 95%. With the assistance of automated production lines, traditional production line work that previously could only be completed by thousands of people now only needs a few dozen people to complete. In terms of spatial layout, Tesla Shanghai Super Factory adopts a linear and double-layer factory design. The transportation of body parts within the factory not only involves horizontal movement, but also vertical and vertical transportation, greatly improving the space utilization rate.
In the first 10 months of this year, the cumulative delivery volume of Shanghai factories reached 771000 vehicles, surpassing the full year of 2022, and is expected to set a new record for annual delivery by domestic luxury car companies. Although Shanghai's super factory continues to increase production capacity, it is not only facing the Chinese market, but also continuously supplying multiple countries in Asia Pacific and Europe. According to data from research firm EU-EVS, Model Y was the best-selling electric vehicle in October, with Tesla ranking among the top sellers of electric vehicles in 14 European countries.
At present, Tesla is still far from its annual sales target or may continue to hit it through price adjustments. In the first three quarters, Tesla delivered a total of 1.3241 million vehicles, an increase of 45.73% compared to 908600 vehicles in the first three quarters of last year. Previously, Tesla proposed a goal of delivering 1.8 million vehicles throughout 2023, which means that it will sell 475900 vehicles in the fourth quarter.
The year-end price reduction trend in the automotive industry is difficult to change
From the perspective of the entire automotive industry, Tesla has become a rare enterprise to increase prices, with most car companies still lowering prices to sprint towards year-end sales.
On November 1st, BYD launched its year-end sprint mode, offering limited time discounts on multiple models such as the frigate 07 and the Song PLUS Champions Edition. The overall discount is equivalent to a price reduction of 5000 to 18000 yuan.
On November 2nd, Zero Run officially announced a price reduction for all models, with a maximum subsidy of 10000 yuan per unit. It is understood that from November 1st to November 30th, the zero run T03, zero run C01, zero run C11, zero run C01 super extended range, and zero run C11 super extended range can all enjoy financial discounts, optional funds, and so on.
Recently, Celes announced a limited time price reduction for its Blue Electric E5 model, with a maximum reduction of 40100 yuan. After the price reduction, the starting price of the new car is only 99800 yuan. In addition, Geely's Link brand and Great Wall's Euler brand have both announced price reductions.
According to data from the China Automobile Association, in October, domestic automobile production and sales completed 2.891 million and 2.853 million units, respectively, with a year-on-year increase of 11.2% and 13.8% in production and sales. The domestic automotive market has shown a significant rebound.
From a price perspective, Cui Dongshu, Secretary General of the All China Passenger Car Federation, stated in a document that the sales structure of the price segment in the national passenger car market continues to rise, with a significant increase in the proportion of high-end car models sold and a decrease in the proportion of mid to low price car models sold. This is a driving force for consumer upgrading, as well as driven by the consumption upgrading of swap groups.
Data shows that from January to October this year, the sales of vehicles priced below 50000 yuan accounted for only 3% of the total nationwide sales, a decrease of 1 percentage point compared to last year; After offsetting the decline in sales of traditional models priced at 50000 to 100000 yuan with the growth of new energy vehicles, the sales share of models priced at 50000 to 100000 yuan was only 15.4%, a decrease of 4.9 percentage points compared to last year; The market share of the 100000 to 150000 yuan vehicle model is 33.9%, recovering quickly; The proportion of vehicles priced above 300000 yuan accounted for 14.2%, an increase of 3.3 percentage points compared to last year.
Huajin Securities Research Report stated that seven departments including the Ministry of Industry and Information Technology have issued the "Work Plan for Stable Growth in the Automotive Industry", which points out that the sales of new energy vehicles will reach around 9 million units by 2023. Based on various policies to promote automobile consumption and the performance of the new energy vehicle market in September, it is estimated that the annual target of 9 million vehicles is expected to be achieved.
