Yuan Weakness Forces Tesla To Raise the Prices of Its Cars in China
It has been a bit an up and down year for Tesla so far as the company recovered from an abysmal start to the year by eventually posting record deliveries in the second quarter. However, the challenges that the company has been facing over the course of the past quarters have proven to be highly problematic, and it remains to be seen how Tesla handles them going forward. China is one of the biggest markets for electric cars, and naturally, it is an important market for Tesla as well. However, in a new development, the company has announced a price hike in the country owing to the weakening of the Yuan.
Considering the fact that the Tesla cars are already regarded as being expensive, it is a bold move from the company and one that could easily backfire. The trade war between the United States and China has been a bruising one and one of the victims of the trade war has been the Yuan. The Chinese government had devalued the currency some weeks back and it is believed that it is going to stay at those levels or even slide below in the future. At this point in time, the Yuan is at its lowest levels in more than 10 years and hence, an unprecedented step of this nature from Tesla is not entirely surprising. According to the announcement from the company, the price of the hugely popular Model X has been bumped up from 790,900 Yuan to 909,900 Yuan and prices of other models have also been adjusted accordingly. The updates have been provided in the electric car makers dedicated website meant for the Chinese market.
However, it is important to note that the company has reiterated that if the trade war between the United States and China continues, thereby further weakening the Yuan, then Tesla would have no choice but to hike prices again. The company plans to have another price hike in December. At the same time, it is necessary to keep in mind that Tesla is also going to start production at its plant in Shanghai soon and if that becomes operational, then it could be far easier for the company to service the Chinese market. The trade war is one thing, but Tesla should probably ensure that they do not end up losing control of their market share in the country.