China automotive costs ‘well-supported’ after Tesla value reduce

Mercedes-Benz finance chief on Wednesday informed CNBC the automaker’s pricing of its automobiles in China is “well-supported” after U.S. electrical car large Tesla slashed costs.

“We positively see the demand being nicely but in addition we see the pricing ranges we put into the market being well-supported available in the market in China,” Harald Wilhelm, CFO of Mercedes-Benz group informed CNBC’s Julianna Tatelbaum in response to a query on Tesla slashing costs.

“We aren’t capturing for the mass, we’re capturing for the highest finish, for the luxurious section, and this one normally proves to be extra resilient additionally in instances of macro uncertainties or troughs.”

China is the biggest marketplace for Mercedes-Benz. The German auto group bought 222,641 automobiles 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 vehicles in China, one of many firm’s most crucial markets.

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

Tesla didn’t give a cause for the worth cuts. However the Chinese language financial system, which did see a bump within the third quarter, remains to be going through numerous challenges together with the nation’s strict Covid containment coverage which has weighed on shopper urge for food.

Tesla’s value reduce comes as competition ramps up in China from home electrical automotive corporations comparable to Warren Buffett-backed BYD in addition to upstarts Nio and Xpeng.

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

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

Wilhelm stated the provision chain state of affairs has “improved” however he stays “cautious,” saying that demand is “being constrained by provide” — 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.