China car prices ‘well-supported’ after Tesla price cut

2022 Mercedes-Benz EQS EV

Mercedes-Benz

Mercedes-Benz finance chief on Wednesday instructed CNBC the automaker’s pricing of its vehicles in China is “well-supported” after U.S. electrical automobile large Tesla slashed prices.

“We definitely see the demand being well but also we see the pricing levels we put into the market being well-supported in the market in China,” Harald Wilhelm, CFO of Mercedes-Benz group instructed CNBC’s Julianna Tatelbaum in response to a query on Tesla slashing prices.

“We are not shooting for the mass, we are shooting for the top end, for the luxury segment, and this one usually proves to be more resilient also in times of macro uncertainties or troughs.”

China is the most important marketplace for Mercedes-Benz. The German auto group bought 222,641 vehicles within the nation within the third quarter of this 12 months, up from 132,579 items in the identical interval final 12 months.

The CFO’s feedback come after Tesla on Monday slashed the price of its Model 3 and Model Y automobiles in China, one of many firm’s most important markets.

That was after Elon Musk’s firm raised the prices of its automobiles earlier this 12 months because of rising uncooked materials prices.

Tesla didn’t give a purpose for the price cuts. But the Chinese financial system, which did see a bump within the third quarter, remains to be going through a lot of challenges together with the nation’s strict Covid containment coverage which has weighed on client urge for food.

Tesla’s price cut comes as competitors ramps up in China from home electrical car corporations corresponding to Warren Buffett-backed BYD in addition to upstarts Nio and Xpeng.

While Mercedes-Benz nonetheless depends closely on gross sales of conventional combustion engine vehicles, it’s ramping up its electrical automobile capabilities, which is more likely to put it in additional direct competitors with Tesla. In the third quarter, Mercedes-Benz bought 84,850 electrical automobiles, up 39% year-on-year. But they nonetheless solely account for round 16% of the corporate’s whole quantity.

Mercedes-Benz’s Wilhelm additionally addressed the availability chain points which have been plaguing automakers, particularly a scarcity of key semiconductors.

Wilhelm stated the availability chain scenario has “improved” however he stays “cautious,” saying that demand is “being constrained by supply” — of semiconductors particularly.

He stated that a few of these points will stay in 2023.

Mercedes-Benz reported third-quarter earnings of 5.2 billion euros ($5.18 billion), up 83% year-on-year.

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