Tesla is raising prices, but not yet breaking hearts. In France, it’s the Model Y that toasts.
After several consecutive declines, across all models, Tesla has decided to raise prices for its flagship models, the Model 3 and Model Y, in several markets, including the United States, China, Japan and Canada.
In France, it is the Model Y Propulsion et Grande Autonomie, the price of which increases by 1,000 euros. It is currently the most popular Tesla model, the best-selling new car in Europe, all engines combined, in the 1st quarter of 2023.
| Tesla Model Y | Prices since May 2, 2023 | Price in April 2023 | Price in March 2023 |
|---|---|---|---|
| Propulsion | €45,990 | €44,990 | €46,990 |
| Great Autonomy | €52,990 | €51,990 | €53,990 |
| Performance | €59,990 | €59,990 | €63,990 |
At this price, the Propulsion version remains eligible for the ecological bonus of 5,000 or 7,000 euros.
Lower quarterly gross margin
The move comes after the company posted a declining quarterly gross margin, the lowest in two years, and missed market estimates. The gross mark remains important for the sector, it is 19.3% against 22.4% expected and 11.4% of operating margin against 19.2% a year earlier.
Since the beginning of the year, Tesla had reduced the prices of its cars by up to -25%, depending on the models and regions, to stimulate demand and face increasingly fierce competition, in particular from the from Chinese automakers such as BYD. However, this strategy had an impact on the company’s margins, and Tesla was forced to raise the prices of its vehicles again.
In the United States, the base price was increased by $250 for the second time in less than two weeks. In China, the increases for the two variants, Model 3 and Y, reached 2,000 yuan, or 250 euros. In Canada, the upward adjustments were 300 dollars (200 euros) for the performance versions of the Model 3 and Model Y. In Japan, the prices of the entry-level Model 3 were increased by 245 euros.
During the first-quarter earnings conference call, Elon Musk said Tesla would prioritize sales growth over earnings amid macroeconomic uncertainty, high inflation and rising rates. The American company is therefore in a delicate situation, having to find a balance between stimulating demand and preserving its margins.
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