Tesla raises price of Model 3, Model Y electric vehicles as surge in nickel

Tesla raised the price of its Model 3 and Model Y electric vehicles (EVs) in China and the US, passing on the higher cost of lithium-ion batteries as nickel prices soar in global markets.

The US carmaker announced on Thursday that the Shanghai-made Performance edition of its Model 3 would be priced at 349,900 yuan (US$55,359), an increase of 10,000 yuan.

The price of the Model 3 basic edition remains unchanged.

Its Model Y long-range and Performance versions both saw a price increase of 10,000 yuan. The long-range edition now sports a price tag of 357,900 yuan while the performance model will set buyers back 397,900 yuan.

Tesla raised the price of its Model 3 and Model Y electric vehicles (EVs) in China and the US, passing on the higher cost of lithium-ion batteries as nickel prices soar in global markets.

The US carmaker announced on Thursday that the Shanghai-made Performance edition of its Model 3 would be priced at 349,900 yuan (US$55,359), an increase of 10,000 yuan.

The price of the Model 3 basic edition remains unchanged.

Its Model Y long-range and Performance versions both saw a price increase of 10,000 yuan. The long-range edition now sports a price tag of 357,900 yuan while the performance model will set buyers back 397,900 yuan.

In the US, where Tesla moved its headquarters from Palo Alto, California, to Austin, Texas, last year, the prices of the Model Y sport-utility vehicle and Model 3 long-range sedan went up by US$1,000 each.

It is the first time that Tesla China has raised the prices of its vehicles assembled at the enormous Gigafactory 3 in Shanghai this year.

“Surging commodity prices have ratcheted up pressure on Tesla and other EV manufacturers in managing costs,” said Gao Shen, an independent analyst in Shanghai. “It is reasonable for them to raise prices.”

He said Tesla and its rivals could raise prices further in the coming months if the costs of commodities such as nickel and lithium were to continue to increase.

TF Securities, a mainland Chinese brokerage, said in a research note on Wednesday that a Model 3 car fitted with a 76.8 kilowatt-hour (kWh) battery would face an additional cost of 10,500 yuan if nickel prices rose from US$20,000 to US$50,000 a ton.

Tesla’s Chinese rivals, including smart EV start-ups NIO and Xpeng, would also grapple with an cost increase of about 10,000 yuan in each of their blockbuster models, TF added.

On the London Metal Exchange (LME), the three-month nickel futures contract surged as much as 110 per cent to US$80,000 per ton on Tuesday, before trading was suspended.

The contract closed at US$48,048 on Wednesday.

The chaotic trading could incur a multibillion-dollar loss at Tsingshan Holding Group, the world’s largest nickel producer, based in Wenzhou in East China’s Zhejiang province. It has built up a large short position in nickel futures on the LME, Bloomberg reported on Tuesday citing anonymous sources.

A battery shortage caused by soaring demand is adding to the supply chain woes facing China’s EV sector.

In December, Xpeng faced complaints from consumers after deliveries of some of its models were delayed.

In late February, it once again apologised to customers for delays in deliveries of its P5 cars, owing to an insufficient battery supply.

Tesla said this week buyers would have to wait up to 20 weeks before its Model 3 vehicles were delivered. The normal delivery time is about three to four weeks.

The delivery volume of new-energy vehicles (NEVs) – comprising pure-electric, plug-in hybrid and fuel-cell cars – is expected to top 5.5 million units this year, up 84 per cent from 2021, according to Cui Dongshu, general secretary of the China Passenger Car Association.

But battery makers will not be able to supply enough power packs to the assemblers unless they build more facilities to ramp up production, warned David Zhang, a car industry researcher at the North China University of Technology.