Mercedes-Benz finance chief on Wednesday advised CNBC the automaker’s pricing of its vehicles in China is “well-supported” after U.S. electrical car large 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 advised CNBC’s Julianna Tatelbaum in response to a query on Tesla slashing costs.

“We’re not taking pictures for the mass, we’re taking pictures for the highest finish, for the luxurious phase, and this one normally proves to be extra resilient additionally in occasions 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 yr, up from 132,579 items in the identical interval final yr.

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

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

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

Tesla’s worth lower comes as competitors ramps up in China from home electrical automotive corporations similar 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 car capabilities, which is prone 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 complete quantity.

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

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

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.