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Tesla TSLA recently announced a price hike for its Model Y Performance car in China.
The electric vehicle (EV) maker has escalated the price of the Performance version of the Made-in-China Tesla Model Y by 10,000 yuan ($1,550) or 2.6%, from 377,900 yuan to 387,900 yuan ($60,192), due to higher manufacturing costs. Nonetheless, the prices of the two other versions, i.e. the cheaper Standard Range version (introduced in China in July) and the Long Range version, remain unaltered, starting from 276,000 yuan and 347,900 yuan, respectively.
The Performance version is expected to be available in the market from the fourth quarter this year. Users who have already paid the deposit will only need to pay the original price and not the new one.
This is not the first time Tesla has raised prices for its Model Y in the Chinese market. On Mar 24, the prices of the high-performance version and the long-range version were both raised by 8,000 yuan.
Internationally, Tesla’s Model Y SUV is sold in two variants: Long Range and Performance. While the Long Range can carry up to seven people, the Performance variant has a five-seater layout. It is only in the China market that Tesla offers the cheaper Standard Range version, which debuted in July this year. While the Standard version can run for 525 kilometers (326 miles) on a single charge, the Long Range and Performance versions promise 594 km (369 miles) and 566 km (352 miles), respectively.
Currently, China is the world’s biggest EV market and the country has been head strong in its transition toward a green future. The country aims electric cars to account for 25% of the new car sales by 2025 and kick start an era of green transportation. Amid this transforming scenario, automakers in China are fast changing gears to electric.
Reportedly, China is Tesla’s second largest market after the United States, accounting for about 30% of its top line. Tesla currently manufactures electric Model 3 sedans and Model Y sport-utility vehicles (SUVs) at its Shanghai plant in China. Tesla regained its Chinese market share once it started selling domestically-produced vehicles in China in late 2019, as those were 13% cheaper for Chinese consumers than the vehicles imported from the United States. The EV giant had also received a strong backing from Shanghai, when it built its first overseas factory there in 2019.
The China market is the key to Tesla’s global growth ambitions. In fact, Tesla’s Model 3 sedan is one of the best-selling EVs in the country. The company has a dominant market share in the mainland with a sale of 147,445 vehicles last year. The company’s flagship model in China — Model Y — also secured a green signal for sale in the country last December.
The picture, nevertheless, seems to have changed recently for Tesla, which has come under the growing regulatory scrutiny in China due to several accidents involving Tesla vehicles in the past few months. In fact, the automaker was called in by regulators in China over recalls, quality and safety concerns with its cars, including battery fires and abnormal acceleration. Earlier this year, Tesla's cars were also banned from China’s military complexes and housing compounds over security concerns of sensitive data being collected by cameras installed in the vehicles. The ban was stimulated by concerns that Tesla is gathering confidential data through the cars’ in-built cameras, which cannot be controlled by China’s government.
Moreover, despite its robust foothold in China, California-based Tesla is battling stiff competition from Chinese electric vehicle firms, like the Shanghai-based electric startup NIO Inc. NIO. Further, Chinese companies like XPeng Inc. XPEV and Li Auto LI, both of which debuted on U.S. exchanges last year, are also capitalizing on the trending EV hype.
Amid the string of negative publicity and the recent backlash faced by Tesla in China, the sales spike in China for the month of August is the only bright spot for the carmaker. Per the China Passenger Car Association (CPCA), the EV giant sold a total of 44,264 China-made EVs in August, including 31,379 units meant for export. The delivery count represents a 275% surge year over year and a gain of 34% from July. In fact, the company’s local shipments of 12,885 units in China marked an increase of almost 50% from July, when deliveries slumped 69%. Tesla’s August numbers are extremely impressive considering that the company was battling severe chip dearth in August. In fact, the chip shortage was so devastating in August that the Shanghai Gigafactory was forced to halt operations for four days.
Meanwhile, ahead of its Indian debut, a test mule of Tesla’s Model Y electric SUV without camouflage has been spotted testing on the Indian roads. While fans were sure that Tesla’s first product for India will be the Model 3, which has been spied a couple of times on Indian roads, the latest testing confirms that Model Y will be the second offering in India.
Tesla currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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