Tesla Raises Prices in US and China, Will It Increase in Korea Too?

Model Y Price Increased by Over 1 Million KRW in the US and China
Manufacturing Costs Rise Due to Battery Raw Materials and More

[Asia Economy Reporter Choi Dae-yeol] As Tesla, the number one electric vehicle (EV) manufacturer, raises the prices of its main models in the United States and China, attention is turning to whether it will increase prices in the domestic market. Since domestic pricing has not heavily considered subsidies and given the sharp rise in raw material prices such as nickel and cobalt, which are key materials for EV batteries, there is speculation that prices will also rise domestically.

According to foreign media and related industries on the 11th, Tesla announced on its website on the 9th (local time) that it will raise the prices of the Model Y sport utility vehicle (SUV) and Model 3 Long Range sedan sold in the U.S. by $1,000 (about 1.23 million KRW) each. It also said it would increase the prices of the same models produced in China by 10,000 yuan (about 1.94 million KRW) each.

As Tesla raised prices in the U.S. and China, there is speculation that domestic prices may also increase. According to Tesla’s website, the Model 3 Long Range is priced at 69.79 million KRW domestically, and the Performance version at 80.39 million KRW. The Model Y SUV is priced at 79.89 million KRW for the Long Range and 86.99 million KRW for the Performance. These prices reflect increases made earlier this year.

The industry points to the soaring manufacturing costs, including battery raw materials, as a factor driving up vehicle prices. As EV sales have increased simultaneously in the three major markets?Europe, China, and the U.S.?demand for batteries, a key component, has risen, and prices for major raw materials such as nickel and lithium have steadily increased. Although battery prices have fallen significantly compared to the past, they still account for 20-30% of the EV price. Among battery costs, raw materials make up the overwhelming majority. Tesla did not raise prices for the rear-wheel-drive versions of the Model 3 and Model Y this time, as these are entry-level models that use relatively inexpensive lithium iron phosphate (LFP) batteries.

Some view the price hikes as an attempt to curb the flood of orders. In Korea, it is reported that it takes about six months on average from ordering Tesla’s main models to delivery. It takes about four to five months in the U.S. and China, where production plants are located. Since the COVID-19 pandemic, disruptions in parts supply, especially vehicle semiconductors, have prevented Tesla and other global automakers from operating production lines properly.

Last year, Tesla raised prices several times, drawing complaints from customers waiting after purchase. EV subsidies can be applied for based on vehicle price, but the price at the time of contract and the price when applying for subsidies differed. The upper limit price to receive the full central government subsidy (7 million KRW) was lowered from 60 million KRW to 55 million KRW this year, leading some brands to reduce vehicle prices accordingly, but Tesla took the opposite approach.

In early last year, Tesla once lowered the Model 3 Long Range price from 64.79 million KRW to 59.99 million KRW. Tesla’s subsidy this year ranges from 3.1 million to 3.15 million KRW depending on the model. An industry insider said, "There have been many factors increasing manufacturing costs since last year, such as rising steel and parts prices," adding, "Considering Tesla’s history of frequently changing prices unlike traditional automakers, there is a possibility of adjustment."

This content was produced with the assistance of AI translation services.