Tesla hints there will be no further Model 3 or Model Y price cuts as its supply chain has now stabilized

Tesla recently made another round of Model 3 and Model Y price cuts, citing a manufacturing cost decrease stemming from production efficiencies achieved in its retooled Gigafactory in Shanghai. The Tesla vehicle price cut was rather significant - up to 14% - and its VP of External Affairs Grace Tao advised in an interview that this will be the last Mode Y and Model 3 price decrease for the foreseeable future.

"I personally feel that the price adjustment reflects, in a sense, our better planning for the supply chain. We will make these adjustments in line with our projections of the approximate level of vehicle costs," said Tesla's VP. She added that 95% of the parts and materials that go in a production unit from Giga Shanghai are now sourced locally, with barely any room for supply chain component price maneuvering left, so the current Model 3 and Model Y prices are expected to stay at this new level for a good while:

The price adjustment of a product is actually a forecast of the company's cost changes in the next period of time. The biggest difference between 2023 and last year is that the epidemic has basically passed. We believe that the supply chain has returned to normal to a large extent, and there will be no such unpredictable shortages of materials as in previous years, which will bring cost uncertainty.

In the days after Tesla's surprise vehicle price cut announcement, many angry recent buyers crowded its stores to protest that they ended up overpaying for their cars. Nevertheless, Tesla reportedly sold more than 10,000 cars on the day of the "price adjustment" and the delivery wait times increased as an early indication that the discounts are working.

Grace Tao tried to pacify recent Tesla car owners there by arguing that the direct price cuts that Tesla employed are actually a fairer concept than legacy vehicle dealerships where pricing is not as transparent and a buyer rarely knows if they overpaid or paid less than others for the same vehicle. The exec also clarified that Tesla doesn't see Chinese EV makers as direct competitors just yet, as they all need to grow the market together and fill many different market segments still.

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