Tesla increases prices in China as demand appears to pick up

Tesla is again increasing Model Y prices in China following its massive price drop last month as demand appears to be picking back up.

After months of rumors that Tesla’s demand in China was slowing down, the automaker implemented significant price drops of up to 13% on its electric vehicles in the critical EV market in early January.

January saw a significant increase in sales of Tesla’s China-made cars, but many of those are for foreign markets.

Insurance registrations are better indicators of sales of Tesla vehicles in China, and it reached over 8,000 units during the first week of February, which is good early in a quarter as Tesla is still generally producing mostly cars for foreign markets at Gigafactory Shanghai at that point.

Another good indicator that demand is picking back up in China is that Tesla is again increasing the price of the Model Y, its most popular model, in the country.

Today, Tesla updated its Chinese online configurator with a 2,000 yuan increase on the Model Y Long Range to now 311,900 yuan ($45,473) and a 2,000 yuan increase on the Model Y Performance, which now starts at 361,900 yuan ($52,600).

Electrek’s Take

Price increases and decreases are generally the best indicators of Tesla’s demand in any given market. Despite the fact that Tesla claims it is simply trying to reduce prices, the automaker tries to sell its electric vehicles for the most it can based on demand.

In the case of China, it’s extremely important to track since it is by far the biggest EV market in the world.

The price increases are small, but they should help Tesla’s gross margins recover in Q2, which is when most of those new orders are expected to be delivered.

Tesla’s Chinese prices are currently highlighting Gigafactory Shanghai’s cost competitiveness as the Model Y Performance in China is cheaper than the Model Y Long Range in the US.