After sparking a price war, the US electric car company raised prices in most of its most important markets, including China and the US.

Recent continuous car price cuts have pushed Tesla’s profit margins to their lowest levels since 2020. At the same time, it sparked a price war in many parts of the world.

Now, the battle has reversed when Tesla raised $ 289 for both the Model Y SUV and Model 3 sedan in China – the largest foreign market – according to information on Tesla’s website on May 2. Currently, Model Y and Model 3 prices start at $38,200 and $33,600, respectively. However, compared to the price at the beginning of the year, both are still cheaper.

These two products in the US – making up the majority of Tesla’s sales – have also become more expensive, with the Model Y from $47,300 and the Model 3 from $40,300. The increase is less than in China, which is $250. Tesla also raised the Model 3 and Model Y prices by about $222 in Canada and $270 in Japan.

This is the second price increase that Tesla has applied recently. At the end of April, the company raised the price of higher-end models in the product range, including the Model S and Model X, by up to $2,500 in the US. But these two models make up a very small percentage of total sales, just 2.5% in the first quarter.

Tesla’s major price cuts are aimed at increasing demand. In April, CEO Elon Musk confirmed the company’s price campaign at a fundraising event, hinting at other discounts to increase sales.

Analysts argue that raising car prices also has the same goal, to warm up the market and urge customers to buy. That is, to prevent customers from adopting a strategy of stopping spending and waiting for the next discount, the company suggests that it is best for them to buy a car immediately because the next adjustment will probably be an increase in price instead of a decrease.

Tesla’s continuous car price reduction also shows that the pressure from competition is increasing against other electric car manufacturers. In the US alone, Tesla has cut prices six times this year alone before their raise.

In China – the world’s largest electric vehicle market – the US company also slashed prices several times between October 2022 and January 2023 after losing market share to rivals, such as BYD. Tesla’s action also sparked a price reduction war in the East Asian country, when more than 10 other car manufacturers followed suit, cutting prices deeply.

According to the latest statistical data from the CPCA, Tesla’s Chinese-made vehicle sales increased 35% in March, reaching more than 88,000 vehicles sold. But this result still lags behind BYD, with more than 100,000 pure electric vehicles.

The strategy of reducing car prices around the world helped Tesla increase sales, but at the same time eroded both its revenue and profits. In the first quarter, net profit was only $2.9 billion, down 22% year-on-year, while revenue fell $1.3 billion from the previous quarter, to $23.3 billion, despite the number of vehicles delivered reached a record level.

Source: vnexpress.net