It is historic: Tao Lin, vice president of Tesla in China, gave a long interview to the Asian media. He then explains the reasons that led Tesla to slash the prices of the Model 3 and Model Y in China. Enough to expect a similar decision in the rest of the world in the coming months. He also dismantles some rumors, such as the hypothetical affordable compact model 2.
In early January 2023, Tesla made a rather radical move in China, slashing the price of its most affordable electric cars, the Model 3 and Model Y. So much so that these two models have never been cheaper in China. The reason cited by observers is declining demand.
Tesla explains the price cuts
To thwart these rumors, Tao Lin, Vice President of Tesla in China, shared a post on Weibo. The latter then explains that price reductions follow numerous optimizations of the production chain, as well as technical innovations at all levels, making it possible to produce at even lower cost than before.
The American firm goes a little further, since Tao Lin gave an interview to the Chinese media, broadcast on wechat In its whole. The woman explains again that the company does not have a demand problem, and that this price adjustment reflects production costs. Specifies that prices can up or downdepending on the evolution of these costs.
Tao Lin clarified that the COVID-related logistics crisis is behind us, and material shortages will not be as unpredictable as in previous years. Enough to allow the company to set prices with less uncertainty. The woman adds that these price adjustments reflect our better understanding of internal logistics and the cost of manufacturing the car« .
A high-performance electric car at 30,000 euros?
In other words, selling its Model 3 at 229,900 yuan (about 31,500 euros) and its Model Y at 259,900 yuan (about 35,700 euros), Tesla would not be selling at a loss at all. A very strange statement, since most of the other Chinese manufacturers (BYD and GAC Aion) have recently announced price increases of 2000 to 8000 yuan (around 275 to 1100 euros). The reason given: the end of the ecological bonus in China and the rise in the price of materials, such as the lithium necessary for the design of the batteries.
The vice president of Tesla in China provides a very interesting precision. He indicates that a car produced locally (in China), costs at least 15% less than an imported car. This thanks to the economy in customs duties and logistics costs.
Cheaper European Teslas in the future?
At the moment, most Tesla’s sold in Europe are produced at the Gigafactory in Shanghai. Except for a few models, such as the Model Y Grande Autonomie and Performance produced in Berlin. We imagine then that it could be very likely that Tesla will lower the sale price of its Model Y in Europe if the manufacturer manages to carry out all production in Germany. But, it is not said, because Berlin currently only produces 3,000 cars a week, which is not enough to cover the European demand.
Remember that Tesla recently did some discounts in Europe, but they are not similar to price cuts. In France, the Tesla Model Y still sells from 49,990 euros against 53,490 euros for the Model 3. However, we find it difficult to consider an immediate price drop on the Model Y, since its price positioning in Europe is abnormal, being cheaper. in its Propulsion version than the equivalent Model 3.
No Tesla Model 2 on the horizon?
As a conclusion to the interview, Tao Lin wanted to deny many rumors. Thus, the Model 2 that would not exist, despite Tesla’s announcement of a new platform next March. Is the vice president denying the rumor because the car will not be called the Model 2, as Elon Musk once pointed out? Or because it will not be a new electric car as such but a robotaxi?
See you in a few weeks to learn more about Tesla’s upcoming electric cars.
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