Tesla's price increase in China twice in four days. What is the intention?
$Tesla(TSLA.US$ Foreword:
At the beginning of May, $Tesla (TSLA) $ Unexpectedly, a series of price increases were announced. On the 2nd, Tesla China raised the price of all Model Y and Model 3 models by 2,000 yuan; on the 5th, Tesla China raised the price of the new Model S and all new Model X models by 19,000 yuan.
Not only did prices rise in the Chinese market, but Tesla also raised the prices of some models sold in the US, Japan, Canada, and Germany.
However, due to Tesla's previous price cuts in various markets around the world to stimulate increased demand, the sales price of its models is still lower than the price at the beginning of this year after this price increase.
There are opinions that although price cuts have brought more sales to Tesla, the declining gross margin has reached a critical point. The current situation where automobile gross margin is close to the 20% red line may also make Musk unable to sit back.
What kind of calculation did Tesla make with this price increase?
Main text:
Tesla's announcement of price increases in various markets around the world may be aimed at increasing its profitability and capital flow.
While price cuts can stimulate demand, they can also reduce a company's profitability, particularly in the face of raw material costs and supply chain pressures.
Furthermore, as the pandemic continues to affect, the uncertainty of the global economic environment may also force Tesla to step up its price adjustments to deal with possible risks.
In addition, Tesla continues to launch new models and update existing models, and may need to increase sales prices to reflect these changes.
Overall, there may be many specific reasons for Tesla's price increase, including improving profitability and reflecting the uncertainty of new models and the economic environment.
However, it should be noted that Tesla's market is very competitive, and for consumers, price is one of the important factors in deciding whether to buy a Tesla model.
Therefore, Tesla needs to find a balance between increasing prices and maintaining market share.
In summary, we should look at Tesla's short-term price adjustments more rationally, including the short-term trend of stock prices. Furthermore, from the perspective of the long-term development of enterprises, great leading companies in the industry are worth our long-term investment.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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ZnWC : Nice review. I've written an article about Tesla's price. cutting. It's about increasing demand during a recession fear market and weeding out competitors with low or negative profit margin. Hence you observe that BYD started a price cut but not NIO which already had a negative profit margin. Another reason is price cutting may form backlash negative market sentiment and hurt share price in short term. It made sense that Tesla stated to increase price again - to prevent 'wait for further price cut' mentality to spread which is quite common during a recession. You'll also see the return of short rally. But what Tesla really worries is prolonged recession and trade protectionism which hurt business.
Quote:
Tesla's price cut is not a desperate Red ocean tactic used to combat decrease in EV demand . In fact Tesla is using Blue ocean + Price cut strategy. Tesla spent much effort to redesign it Gigafactory production to reduce its cost by 50%. There are also many new technology introduced during Tesla's Investor Day to highlight that its EV stand out among others...
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