Tesla raises Model Y prices in Chinese market

US electric automaker Tesla is increasing the price of its locally produced Model Y in the Chinese market by 8,000 yuan (US$1,226), the company announced on Wednesday.

Customers who have already placed orders for the Model Y will not be affected.

Tesla told domestic news portal Caijing the price increase is primarily due to cost fluctuations.

The price of its Model Y Long Range increased from 339,900 to 347,900 yuan, and the Model Y Performance increased from 369,900 to 377,900 yuan, according to the company's official website.

Some industry analysts said the price increase may be due to overall costs caused by the rising prices of batteries and raw materials.

“The current market demand for Model Y is very strong and the price increase is based on market research,” said David Zhang, an independent automotive consultant. “The decision is in accordance with the current market situation and will not affect its sales.”

Tesla started accepting orders for the Model Y in January. The vehicles are now rolling off the assembly line at its Pudong Gigafactory. 

The Model Y is Tesla's second locally manufactured vehicle, following the release of the Model 3 last year. In early 2020, Tesla began its China-made Model Y project, which proceeded smoothly with support from the Shanghai government.

On Tuesday, Tesla Founder and CEO Elon Musk said China will be Tesla's largest market, and that most of its vehicles will be manufactured in the country — set to become the world's largest electric vehicle market.

Musk predicts that in the next ten years, China's economic development will improve, in part because the country is committed to achieving a future with sustainable energy. He said he is impressed by China's commitment to pursuing a low-carbon economy and sustainable energy consumption in the country's 14th Five-Year Plan.