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Tesla raises car prices globally, with the biggest increase in China - Brilliant strategy
The flip-flop move - 'price cut and increase' is a brilliant marketing strategy. In my previous article I explained Tesla's price cutting is 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.
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. Another reason is price cutting may form backlash negative market sentiment and hurt share price in short term. Price increase will see the return of short rally.
But what Tesla really worries is prolonged recession and trade protectionism which will hurt business.
Quote:
Tesla has raised prices in its most important electric vehicle markets, including China and the United States, reversing a series of recent price cuts that have pushed the company's profit margin to the lowest since 2020 and sparked a price war.
Tesla has raised prices in its most important electric vehicle markets, including China and the United States, reversing a series of recent price cuts that have pushed the company's profit margin to the lowest since 2020 and sparked a price war.
But analysts said the recent price increases had the same purpose of stoking consumer demand.
Tesla may be trying to "reverse customer expectation for further price cuts," so as to prevent customers from adopting a further wait-and-see strategy, said Citi analysts on Tuesday. It may also want to "test demand elasticity given repeated price cuts could lead to weakened effectiveness in boosting sales volume."
Source:
Tesla raises car prices globally, with the biggest increase in China | CNN Business
Previous article about Tesla's price cut:
Tesla's Q1 earnings show hopes and opportunity despite recession fear
Source:
Tesla raises car prices globally, with the biggest increase in China | CNN Business
Previous article about Tesla's price cut:
Tesla's Q1 earnings show hopes and opportunity despite recession fear
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ZnWC OP : There was a point in this article that I disagree:
"Tesla’s sales of its China-made vehicles surged 35% in March to more than 88,000 units. But it still lagged behind BYD, which sold more than 100,000 pure battery EVs."
After the price cut, Tesla's sales didn't lag behind BYD. The article quote figure without giving details what the data is comparing (YoY or MoM). In fact BYD Q1 2023 sales and profitability dropped if you compare QoQ data. I have posted 2 articles to illustrate this:
BYD net profit up 410% y-o-y, but down 44% on previous quarter
https://www.moomoo.com/community/feed/110292822065158?data_ticket=212ca245a589f1e400fb2e247953bc77
Tesla Q1 2023 deliveries were higher than BYD...
https://www.moomoo.com/community/feed/110171874787334?data_ticket=212ca245a589f1e400fb2e247953bc77