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Mercedes-Benz says automobile costs are ‘well-supported’ in China after Tesla cuts costs of its EVs

2022 Mercedes-Benz EQS EV


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 big Tesla slashed costs.

“We positively see the demand being nicely but additionally 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 instructed 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 offered 222,641 vehicles within the nation within the third quarter of this yr, up from 132,579 models in the identical interval final yr.

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 yr because of rising uncooked materials prices.

Tesla didn’t give a purpose for the worth cuts. However the Chinese language economic 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 client urge for food.

Tesla’s value reduce comes as competition ramps up in China from home electrical automobile companies akin 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 vehicles, it’s ramping up its electrical automobile capabilities, which is prone to put it in additional direct competitors with Tesla. Within the third quarter, Mercedes-Benz offered 84,850 electrical autos, up 39% year-on-year. However they nonetheless solely account for round 16% of the corporate’s complete quantity.

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

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

He mentioned 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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