The proportion of China-made parts in Tesla vehicles has basically reached its target, so there is little possibility of further price cuts in the future, Grace Tao, Tesla's vice president of external affairs, told Yicai.com.
Tao said the price of electric vehicles is cost-related and is influenced by the cost of raw materials and the price of components. "If the price of raw materials or components increases in the future, it is not impossible for Tesla to increase the price of its electric vehicles," she said.
Since the China-made Tesla Model 3 was launched, the price has been reduced several times, which has caused dissatisfaction among some existing owners.
The latest round of price cuts was made on October 1, when the Model 3 with a standard range was adjusted to RMB 249,900 ($36,800) after subsidies.
In the period between October 2019 and October 2020, the China-made Model 3 has undergone five price cuts, with the price of the entry-level standard range model being reduced by more than RMB 100,000 from the initial RMB 355,800.
According to the current production process at Tesla's Shanghai Gigafactory, the cost of the China-made Model 3 is likely to be less than RMB 200,000. This means that the gross margin of China-made Model 3 is about 30%, which is much higher than that of the US-made Model 3.
According to an analysis by Ping An Securities in October, considering the gross margin of the product and the positioning of the model, RMB 200,000 could be the bottom line for the China-made Model 3, and another price cut is expected in the first half of next year.
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