Tesla raises Model 3 sticker price in China after government kicks off three-year plan to rein in rebates to spur competition

A Tesla Standard Range Model 3 sedan, assembled at the carmaker’s Gigafactory 3 in Shanghai, will now carry a sticker price of 303,550 yuan (US$42,874), compared with 299,050 yuan a week ago. The Long Range Model 3 will be priced 1.5 per cent higher at 344,550 yuan when it arrives in showrooms in June, according to Tesla’s website.

The increases are a direct reaction to yesterday’s announcement of a 300,000 yuan cut-off for electric cars to qualify for rebates from the Ministry of Finance. Subsidies will be trimmed by 10 per cent this year, cut by 20 per cent in 2021, and reduced by 30 per cent in 2022 according to the ministry, in a plan to spur local manufacturers to innovate and compete against petrol guzzlers and imported marques.

“The price rise will have only a short-term impact on Tesla’s sales,” said Tian Maowei, sales manager at Yiyou Auto Service in Shanghai. “An extra 4,500 yuan will not be enough to make those middle-class buyers change their minds if they are fans of Tesla cars.”

China’s rebates on electric vehicles were first introduced a decade ago to nurture local assemblers, a strategy that has turned the largest vehicle market on the planet into the biggest for new-energy cars. Subsidies initially lopped as much as 60,000 yuan from a vehicle’s price tag, excluding any extra goodies thrown in by local authorities to support their hometown industries.