Tesla cuts starting price for Model 3 by 9% in China

By BLOOMBERG | 3 January 2020


A China-made Model 3 vehicle is seen at a delivery ceremony in the Shanghai Gigafactory on Dec 30. — Reuters


SHANGHAI: Tesla cut the starting price of its China-built Model 3 sedans by 9%, as it steps up efforts to lure customers in the world’s biggest electric-vehicle market after opening a factory on the outskirts here.

The price was lowered to 323,800 yuan (RM191,000) from 355,800 yuan (RM210,000). After subsidies from the Chinese government, prices start from 299,050 yuan (RM176,000), Tesla’s website showed. That puts the cars closer to some produced by domestic EV makers, such as Xpeng Motor’s latest P7 sedan, which starts at 240,000 yuan (RM142,000). NIO Inc.’s electrified SUVs start from as high as 358,000 yuan (RM211,000).

California-based Tesla, which handed over the first of its Chinese-made cars to 15 employees on Dec 30, will start delivering local models to the public on Jan 7, it said on its official WeChat account. That’s just one year after breaking ground at the Shanghai plant, Tesla’s first factory outside the US.

"This price cut shows Tesla’s confidence in cost control and determination in rapidly expanding its market share,” said Yale Zhang, managing director of autoforesight, a Shanghai-based consultancy.
Elon Musk’s company is also lowering the cost of optional extras, from body colour to high-performance wheels, according to a statement. Home-charging services aren’t included, and cost an extra 8,000 yuan (RM4,700).

Tesla is already assembling more than 1,000 cars a week at its China facility and plans to double that rate over the year, according to Song Gang, the manufacturing director of the plant.

Musk has said weekly production of 3,000 cars in Shanghai is a target at some point.

Tesla plans to increase local sourcing to 100% in Shanghai by the end of the year, from about 30% now, Song said. That should help lower costs as Tesla and other ambitious EV makers face a challenging market in China, where auto sales have been slowing.

Last month, people familiar with the matter said localisation would help Tesla cut prices by 20% or more in 2020. The company has been exempted from a 10% purchase tax for its locally built sedans, posing more of a threat to the likes of NIO, Xpeng and BYD Co.

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