Tesla's price cuts are expected to shake the Chinese electric vehicle industry, as this move is likely to capture market share from competitors.
- A more affordable Model 3 is expected to catalyze EV adoption as consumers attracted by the high-profile performance EV will help lift the electric car market over the long-term.
- Competitors such as Nio and global luxury car makers such as Daimler and BMW may feel the pinch. Nio’s lower-price model, its ES6 SUV, costs RMB 338,000 after the subsidy, while the starting price of Mercedes Benz’s EV, the EQC SUV, is nearly double that of locally built Model 3 after applying the subsidy.
Tesla on Friday revealed the long-awaited reduction in price of its cheapest Model 3 version. The China-made Model 3 now starts at RMB 299,050 ($42,920), according to the company’s website.
- The price reduction includes a subsidy of around RMB 25,000, which China’s Ministry of Industry and Information Technology granted the company last month.
- Beijing also exempted Model 3 buyers from a 10% purchase tax of around RMB 26,000. The company reduced the sticker price by 9% to RMB 323,800, but warned that the final sale price is subject to change in accordance with government policies.
- The prices for the all-wheel drive models remained unchanged.
- Tesla is scheduled to deliver the first batch of China-built Model 3 sedans to consumers on Tuesday.
As expected, such a decrease in prices entailed an influx of orders. “Our store looks like a grocery market. So many people inside, ”said one of the store’s employees,“ I lost my voice talking to so many customers non-stop,” she continued.
Wonder how crazy MIC #Model3 sales is after price drop a few days ago. “Our store looks like a grocery market. So many people inside”, said one sales rep. She further said “I lost my voice talking to so many customers non-stop”. A good problem to have? @elonmusk pic.twitter.com/G8JiJdonXJ— Ray4️⃣Tesla⚡️🚘☀️🔋 (@ray4tesla) January 5, 2020
Excuse me, how many new orders of the Made-in-China Model 3 per minute?? pic.twitter.com/nJltU6V6L2— Vincent (@vincent13031925) January 6, 2020
It should be noted that everyone who ordered the MIC Model 3 before the price reduction also receives this discount if the car has not yet been delivered to them.
Tesla late last year reported robust 48% year-on-year revenue growth to $2.14 billion in China for the first three quarters. A report by well-known auto market blogger, Chang Yan, said that the company’s sales target in China could increase 500% to 250,000 units in 2020 as a result of the price reduction.
This number means that Model 3 should become the main product in the Chinese automobile market, and it really must compete with cars, which is what happens thanks to this price reduction.
While the state of China provides subsidies for MIC Model 3s, a large number of orders should be expected by Tesla, same as we saw in the markets of Norway and the Netherlands last year.
Featured image: @ray4tesla/Twitter
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.