Tesla cuts price of new Model 3 in China as moment of truth nears for variant strategy
Tesla cut the price of its new, longer-range Model 3 variant by nearly 4 per cent just before deliveries were set to begin, a move set to heighten competition in mainland China’s premium electric vehicle (EV) segment.
The US carmaker said on Monday that it would price the Shanghai-made car, which boasts a driving range of 830km, at 259,500 yuan (US$36,391), 10,000 yuan lower than the price it touted on August 12. Deliveries are expected to begin this month.
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The company is also offering mainland buyers of the car, and some other Tesla models, a subsidy of 8,000 yuan for buying insurance, plus a five-year interest-free loan that amounts to 20,000 yuan in savings.
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The new Model 3 and a six-seat variant of the Model Y also due to begin deliveries this month aim to arrest a decline in market share by attracting wealthy Chinese customers who prefer spacious, longer-range EVs. Tesla’s share of the mainland EV market fell to 3.2 per cent in June, according to the China Passenger Car Association (CPCA). Its sales accounted for 16 per cent of the national total in 2020, when the Shanghai factory opened.
“The price reduction is a surprise move by Tesla to attract more middle-income consumers,” said Phate Zhang, founder of Shanghai-based industry data provider CnEVPost. “After all, it is facing mounting challenges from its local rivals, whose vehicles are much cheaper.”
Tesla has long stated that it adjusts the prices of its locally built vehicles regularly based on production costs.
The longer-range Model 3 features a high-performance battery from LG Energy Solution and a single motor with higher peak power than the existing version, which has a range of 634km and costs 14 per cent less.
In late July, Stellantis-backed EV maker Leapmotor launched a midsize sedan that offers similar features to Tesla’s Model 3 at less than half the price. The Hangzhou-based company said the B01, priced from 89,800 yuan on the mainland, would target markets around the world.
Guangzhou-headquartered Xpeng has reported sizzling sales of its Mona 03 midsize sedan since the EV debuted in August 2024 as another rival to the Model 3. The car, fitted with a preliminary self-driving system, is priced from 119,800 yuan.
Tesla’s Shanghai Gigafactory handed 67,886 Model 3 and Model Y vehicles to customers on the mainland and overseas in July, a decline of 8.4 per cent from a year earlier, according to data from the CPCA. Deliveries fell 5.2 per cent from June, which had been the first positive month after an eight-month decline.
