Why is Tesla cheaper in China than US
Tesla Chinas entry-level Model 3 is now cheaper than its US-made counterpart
Tesla seems determined to start the fourth quarter strong in China, with the electric car maker rolling out price adjustments for the Model 3 on October 1. With these changes, the Model 3 Standard Range Plus produced in Gigafactory Shanghai has now become more affordable than its Fremont-made counterpart. And it comes with longer range too.
The updates to Tesla Chinas Model 3 pricing were rolled out amidst reports that the company is about to start equipping the Standard Range Plus variant of the all-electric sedan with cobalt-free lithium iron phosphate (LFP) batteries. LFP batteries, while not as energy-dense as the nickel-manganese-cobalt (NMC) cells used by the company, are lower-cost and cobalt-free. In true Tesla fashion, it appears that the electric car maker has now passed over these cost savings to consumers.
With their updated pricing, the Tesla Model 3 Standard Range Plus from Gigafactory Shanghai could now be purchased for CN249,900 (about $36,800). Thats about CN21,650 less than its previous price. This effectively makes the vehicle more affordable than its American-made, NMC battery-equipped counterpart from the Fremont Factory, which starts at $37,990. Chinas Model 3 Long Range RWD also received a price cut with the most recent update, with the vehicle now starting at CY309,900 (about $45,600). Thats CN34,150 less than its previous price.
What is rather interesting is that Tesla has also updated the range of the China-made Model 3 Standard Range Plus. Previously, the vehicle was listed with a range of 445 km (about 276 miles) under the NEDC cycle, and following todays price adjustment, the entry-level Model 3 is now listed with an NEDC range of 468 km (about 290 miles). This is despite the vehicle using LPF batteries, which are less energy-dense than the NMC cells utilized by the company.
With such changes rolled out, it would not be surprising if the Model 3 from China ends up seeing much more demand than before. Even with its previous pricing, after all, the Made-in-China Model 3 was already one of the countrys best-selling electric cars. The Standard Range Plus Model 3s lower price point could effectively bring the vehicle within reach of more buyers, which, of course, could benefit the companys numbers this fourth quarter.
What is rather exciting is the fact that Gigafactory Shanghai is still ramping its operations. The Phase 2 zone, which hosts the Model Y production area, is yet to start its vehicle production activities. Elon Musk has remarked that Tesla China could produce about 1 million vehicles per year. This hints that Gigafactory Shanghai still has a lot of room to grow, especially with regards to its production of the Model 3.
Tesla Chinas entry-level Model 3 is now cheaper than its US-made counterpartTeslas Model Y Is 40% Cheaper in China Than in the US After Latest Price Cuts
Tesla (TSLA) today (Jan. 6) slashed prices of its Model 3 and Model Y electric cars in China for the second time in three months in a bid to boost demand amid falling sales. After the latest cuts, the entry-level Model Y is 43 percent cheaper than in the U.S., and the base Model 3 costs 30 percent less.
Tesla shares fell 3.5 percent in todays pre-trading hours and is up 1 percent by mid-day. Shares fell 70% in 2022.
Tesla has lowered price of Model Y in China by 10 percent to a record low of 259,900 yuan ($37,875). In the U.S., the Model Y starts at $65,990 and is not eligible for electric vehicle tax credits under the Inflation Reduction Act. The entry-level Model Y available in China is a standard-range vehicle with rear-wheel drive, while the U.S. base model comes with a longer range and all-wheel drive.
The starting price for China-made Model 3 has dropped 14 percent to 229,900 yuan ($33,427), about 30 percent cheaper than in the U.S. Model 3, except for the most expensive Performance version, is eligible for $7,500 in federal tax rebates in the U.S.
All Tesla vehicles sold in China are locally manufactured at the companys Shanghai Gigafactory, where labor and material costs are lower than the Fremont, Calif. factory, which supplies the U.S. market.
Tesla lowered the prices of Model 3 and Model Y in the U.S. by about $4,000 in early December. The discounts are smaller compared with price drops in China.
Todays price cuts brought the starting price of Model 3 to the same level of the Han EV sedan made by BYD, Teslas largest competitor in China. Last year, BYD overtook Tesla as the worlds largest seller of electric vehicles, when including plug-in hybrid vehicles.
Tesla cars now nearly 50% cheaper in China than in US
Tesla cut prices for all versions of its Model 3 and Model Y vehicles in China, according to its Chinese website on Friday. The US automaker reduced its starting price for Model 3 to 229,900 yuan ($33,427.84) from 265,900 yuan, and lowered it for Model Y to 259,900 yuan from 288,900 yuan, the website showed.
Tesla also introduced its higher-end Model S sedan and Model X to get a better hold on the premium end of the worlds biggest EV market.
The starting price for the locally-built Model Y sports utility vehicle has been slashed to 259,900 yuan ($37,875) from 288,900 yuan, according to the companys Chinese website. Thats a record low for China and 43% cheaper than the $65,900 starting price listed on Teslas US website. The Model 3 goes to 229,900 yuan from 265,900 yuan, about 30% cheaper than in the US.
Tesla is facing competition in both the mass and premium segments, with the likes of Warren Buffett-backed BYD Co., Xpeng Inc. and Nio Inc., as well as international players such as Porsche AG and Mercedes Benz Group AG, all vying for sales in China.
Tesla said its newly introduced Model S, with a redesigned interior, is priced at 789,900 yuan in China, while the Plaid version Teslas fastest car, taking only 2.1 seconds to go from zero to 100 kilometers (62 miles) per hour will be sold from 1.01 million yuan. The Model X SUV is priced from 879,900 yuan and the Model X Plaid starts at 1.04 million yuan. Deliveries will begin in the second quarter this year, Tesla said.
Austin, Texas-based Tesla is a dominant player in Chinas mass-market EV sector vehicles that cost no more than 300,000 yuan. The company localized production of Model 3 sedans at the end of 2019 when it opened a factory in Shanghai capable of churning out 450,000 cars a year. It started shipping Model Ys from there in January 2021.
Chinese electric vehicle brand Zeekr aims to double sales in 2023 to about 140,000 vehicles and plans to expand sales in Europe, Chief Executive Andy An told Reuters on Thursday.
Zeekr, a brand created by Chinese automaker Geely, sold 72,000 vehicles in 2022, mostly in China. Its 001 model, priced at about 300,000 yuan ($43,600), competes with Tesla Inc's Model Y crossover and other luxury models in the increasingly competitive Chinese market.
Tesla has cut prices and trimmed production in China as it faces intensifying competition from Chinese brands such as Zeekr. Tesla sales in December fell to the lowest level in five months.
Tesla shipped over 710,000 vehicles from Shanghai in 2022, representing about 54% of its worldwide sales. But deliveries slowed in December as production was suspended for equipment upgrades and demand ebbed. Tesla announced earlier this week that global deliveries were lower than expected for a third-straight quarter, prompting a 12% slump in its share price Tuesday.
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Topics You May Be Interested InTesla Model 3 Price Reduced in China While Prices in the US Remains on the Rise
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Full Self-Driving capabilities include navigate on Autopilot, Auto Lane Change, Summon (moves your car in and out of a tight space using the mobile app or key).
The Chinese market has become increasingly important for Tesla, especially since launching the Model Y produced at Gigafactory Shanghai.
Electric vehicle maker Tesla has reduced the price of the Model 3 Standard Range in China, even as the price of the same vehicle produced in the US has been going up. Since the beginning of the year, Tesla has been increasing the price of its electric vehicles in the US. In China, where Tesla now sells vehicles produced locally, the prices have been stable.
But now, the automaker announced a price change in China and its trending differently than in the US, reports Electrek.
Tesla China announced that the price of the Model 3 Standard Range is going down by 15,000 yuan or the equivalent of $2,323.
The cheapest Tesla vehicle in China now sells for 235,900 yuan ($36,500) thats less than the $39,990 starting price of the base Model 3 in the US, the report said.
In China, where Tesla still has a press relations team, the automaker communicated to the media that the price decrease was due to cost fluctuations."
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It would imply that Teslas costs in China have improved despite CEO Elon Musks warning that Gigafactory Shanghai is facing some supply chain issues during Teslas earnings call earlier this year, the report said.
According to the report, the EV maker still hasnt brought back the popular version of its electric sedan to the market.
The Chinese market has become increasingly important for Tesla, especially since launching the Model Y produced at Gigafactory Shanghai.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed - IANS)CarBuzz
Since the start of the year, prices for the Tesla Model 3 and Model Y have been consistently rising. The Model Y Long Range has seen its price increase an astonishing six times so far in 2021, going from $48,490 to the current $53,990. Tesla has never provided an explanation why this is happening but many assumed (and Elon Musk even said) that it had to do with supply issues. Because Tesla lacks a PR department it's impossible to ask specific questions and receive answers. Musk might reply to a question on Twitter, at best.
Reuters put a team of analysts to work in order to figure what's going on here and their findings make for interesting reading.
The main reason for US market price increases and the removal of features like lumbar support and a radar sensor is so that they can be lower in China, the world's largest EV market. Unlike in the US, Tesla faces a lot more Chinese domestic competition who sell cheaper EVs. Tesla has also faced recalls, angry and sometimes very vocal customers, and government pressure it's not accustomed to in America.
The analysts found that Chinese Tesla owners are generally less enthusiastic about the product compared to their US counterparts. Furthermore, they're less likely to be repeat customers, unlike in the US as well as Europe. Tesla is also working harder to attract Chinese buyers. That aforementioned Model Y is listed at 276,000 yuan, or about $42,400. The carmaker even aggressively advertises loan offers, something it doesn't do elsewhere.
So, is the reason for Tesla's US market price bumps to help keep them lower in its most important up-and-coming market? Possibly, but it's also important to consider that battery prices and labor costs are lower in China and this is expected to remain the case for at least the next decade. Tesla is embarking on a strategy of cutting costs and boosting margins in the US while keeping prices stable in China because boosting sales there is vital.
Tesla has a cult-like following in North America and Europe and there are several brand-dedicated websites that aren't always critical enough when it comes to the company's decisions. That's not the case in China and because of this Tesla must work harder there.
