Tesla announced the official pricing of the made-in-China (MIC) Model Y last week, surprising everybody by pricing it lower than in North America, while at the same time adding new features.
That low price set off a wave of orders that almost took down Tesla’s website and reportedly resulted in more than 100,000 orders in the first 10 hours after the announcement.
Even with the already low price, Tesla’s gross margins on the Model Y are 3X the industry average, meaning it has even more room to drop the price further while maintaining margins well above industry standards.
The data comes from the Chinese-based financial firm Gousen Securities, which says the cost to produce the MIC Model Y is ¥237,930 ($46,600 CAD). Compared to the retail price of ¥339,900 ($66,600 CAD). That equates to a 30% gross margin, while the industry average is around 10% for a comparable car.
With sustained demand, the report says over time Tesla could lower the price to ¥260,000 ($51,000 CAD), and still maintain a healthy 25% gross margin.
If Tesla follows through with this strategy, it wouldn’t be the first time. When the Model 3 was released in China last year, it reportedly had a gross margin of 39.1%. That led to several successive price cuts, bringing the price down to ¥249,900 ($49,000 CAD).
According to Guosen Securities, the cost of MIC Model Y is ¥237,930 while it currently sells for ¥339,900. That’s 30% gross margin. Over time, there is room for price to drop down to 260k while maintaining 25% gross margin. Elsewhere a report says LFP MY may debut in late 2021. pic.twitter.com/PkEoV6Vqpt
— Ray4Tesla⚡️🚘☀️🔋 (@ray4tesla) January 5, 2021