Tesla unveiled its updated Model 3 electric vehicle in China. The EV leader is hoping to boost sales of a model that appeared on roads in 2017. It’s also a chance to do something unusual for an EV maker in 2023—raise prices.
Tesla’s Chinese website on Friday included a “new version” on its Model 3 page. The overhaul includes a longer per-charge range and a higher price. The base Model 3 will go about 380 miles on one charge, up about 30 miles from the old version. Those are the numbers based on the way China estimates range. Ranges coming from the Environmental Protection Agency are typically lower than that because they test the EVs differently. The price for a new base Model 3 is up about 12% to $36,000.
Tesla
(ticker: TSLA) also slashed prices on its expensive Model S and Model X cars, which start at about $100,000.
Tesla cut prices significantly at the start of the year on most of its models. The move resulted in lower profit margins. Tesla’s operating profit margin in the second quarter was 10% compared with 15% in the year-ago quarter.
Investors don’t want to see more cuts, but the X and S are relatively low-volume vehicles. The bigger deal is the price for the updated Model 3.
Higher prices help boost profit margins. Updated vehicles can also boost sales volumes. In the U.S., Tesla sold 112,791 Model 3 sedans in the first half of the year, up about 12% from the same span of 2022. It’s growth, but below market growth and below growth of the Model Y. In the U.S., Tesla sold more than 200,000 Ys in the first half of 2023, up more than 50% year over year.
Tesla is expected to sell roughly 1.8 million cars around the world in 2023, up from 1.3 million sold in 2022. Wall Street projects 2.4 million units for 2024. Tesla is expected to grow and the new Model 3 is expected to help.
In China, new content can also help battle price cuts from other automakers. Citi analyst Jeff Chung counted some 25 cuts on EV models in August. Cuts have come from Tesla and others including
BYD,
NIO
(NIO),
XPeng
(XPEV).
Tesla sold roughly 294,000 units in China in the first half of 2023, up almost 50% year over year. It can be tough to judge growth and market share in China. Tesla serves the Chinese market and the European market from its plant in Shanghai.
Tesla stock slipped 0.2% in premarket trading Friday.
S&P 500
and
Nasdaq Composite
futures were 0.4% and 0.3%, respectively.
Tesla shares have more than doubled this year.
Write to Brian Swint at [email protected]
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