by YANG Shihan
Tesla has raised prices in China again, this time it’s the long-range Model Y by 2,000 yuan (US$280). After putting the market through a year of price traumas, Tesla increased the ticket on the Model Y by 14,000 yuan at the end of last month. The company has since increased all models by 2,000 yuan.
Demand is unaffected with 16,000 new Tesla a week finding homes in China. The waiting time is now eight weeks for the Model Y and nine weeks for Model 3.
Tesla China says its prices are based on costs. The recent rises was attributed to inefficiencies at the factory and spending on AI.
Still, weekly price adjustments are almost unheard of in the car industry. Car prices are usually determined by longer-term factors. The price of the Model 3 is now a third lower than two years ago, thanks to improved batteries and a local supply chain.
What sets Tesla apart is that it sells directly to customers, bypassing traditional dealerships. Dealers take on the risks associated with marketing, customer service, and inventory management in exchange for a share of the sales.
This enables car makers to focus on development and manufacturing but deprives them of timely and accurate market feedback. When they order parts and allocate capacity, the information they act on can be months old, or inaccurate to begin with.
But even with the right information, few have Tesla’s flexibility. BMW, for one, tried and failed to synchronize sales and manufacturing. It requires a special setup, one that Tesla has spent years building.
The prolonged low prices this year have hurt Tesla’s bottom line with a 44 percent decline in net income.
