Tesla cuts the price of China-made Model 3 cars by 9 per cent to compete with home-grown brands in world’s No. 1 car market
- The price of Model 3 cars with a standard-range battery pack has been lowered to 323,800 yuan from 355,800 yuan, according to Tesla’s website
- After the Chinese government’s 25,000-yuan subsidy, a Model 3 vehicle starts from 299,050 yuan, pricing it between NIO’s electric SUVs at 358,000 yuan, and Xpeng Motor’s P7 at 240,000 yuan
Tesla has cut the price of Model 3 cars rolling off its first offshore Gigafactory in Shanghai, as it reduces the premium of its bestselling electric vehicles to compete for the affection of China’s budget-conscious owners in the world’s largest car market.
“A Tesla with the price tag of lower than 300,000 yuan is believed to be very attractive to Chinese car buyers,” said Gao Shen, a Shanghai-based independent manufacturing sector analyst. “The price cut is set to fuel competition in the country’s high-end electric vehicle market.”
Infographic: China's vehicle ventures
The US$2 billion Lingang factory is expected to make about 3,000 Model 3s a week initially, ramping up to 500,000 per year when it becomes fully operational.
The favourable terms for Tesla come as China’s vehicle market has been grappling with more than a year of sales slumps. In addition to NEV start-ups like NIO and Xpeng, Tesla would have to compete with traditional carmakers that are making a big push into electrification, from home-grown Chinese brands like BYD and Geely Automobile to international marques like Volkswagen, Nissan Motor and Ford Motors.
Even electric vehicle sales have run out of power after four years of taking market share from cars powered by internal combustion engines (ICEs). Sales of NEVs fell 42 per cent in November to 78,000 units, the fifth straight month of declines, according to the China Passenger Car Association.
Shares of Chinese carmakers were mixed amid a declining market, after Tesla’s price cut. BYD, the largest Chinese maker of electric vehicles, fell by as much as 1 per cent in Shenzhen, while Geely’s shares jumped by as much as 4.4 per cent in Hong Kong. NIO’s shares plunged 7.5 per cent overnight in New York trading, in their biggest single-day drop since November 29. Xpeng is not publicly traded.