On Friday, Tesla unveiled a redesigned Model 3 produced in China with an extended driving range, marking the first time the automaker has introduced a new model in China ahead of the United States.
The new Model 3 is being manufactured at Tesla’s Shanghai plant and comes with a starting price that is 12% higher than the previous base model in China. It will also be exported to various markets across Asia, Europe, and the Middle East.
Concurrently, Tesla reduced the prices of its premium Model S and Model X by approximately 14% to 21% in both China and the United States, its two largest markets.
Raising the base price for the Model 3, Tesla’s top-selling model after the Model Y, could help protect profit margins. However, the price reductions for its higher-end models highlight the ongoing competitive pressures faced by EV manufacturers, particularly in China, where Tesla initiated a pricing battle with Chinese rivals, including industry leader BYD, earlier in the year.
The new Model 3 marks Tesla’s first modification to its mass-market vehicle lineup since the launch of its global best-seller, the Model Y, in 2020.
Tesla has not disclosed a launch date for the new Model 3 in the U.S. market, where it currently offers discounts of over $5,000 on certain inventory vehicles. The Model 3 is also manufactured in Fremont, California.
CHINA-FIRST INTRODUCTION
Tesla intends to introduce the latest Model 3 at a trade fair in Beijing on Saturday, and some of its new features, such as a rear display for rear-seat passengers, appear tailored to appeal to Chinese car buyers.
Tesla stated that the vehicle boasts an improved acoustic system, a more comfortable interior, and additional airbags. Exterior images revealed minor alterations that give the sedan a sleeker front end and new headlights.
The new Model 3 also promises an increased driving range. The standard version is rated for a range of 606 kilometers (377 miles) based on China’s testing standards, representing a 9% improvement over the previous base model in China.
Tesla has initiated order bookings and will commence deliveries in China during the fourth quarter. It is also accepting orders in other markets where it exports vehicles from Shanghai, including Germany, Japan, Malaysia, Australia, and New Zealand.
The new Model 3 is anticipated to perform well outside China, where there is less competition in the EV market, according to Yale Zhang, Managing Director at the Shanghai-based consultancy Automotive Foresight.
“But in China, we have already seen plenty of new models rolling out since the (Shanghai) auto show in April with similar and even better features and lower prices,” he added.
As reported by Reuters in November of last year, Tesla had been working on a redesigned Model 3 under the codename “Highland.” Individuals involved in the project had indicated that its primary objectives were cost reduction in production and enhancing the model’s attractiveness.
While Tesla did not provide specific details about the new Model 3’s battery, a source familiar with the features mentioned that it employs the same lithium-iron-phosphate battery supplied by CATL for the base model.
The increased driving range is attributed to weight reduction and improvements in the car’s aerodynamic profile to minimize wind resistance, according to the same source. Tesla had not immediately commented on the battery-related information.
In the Chinese market, the Model 3 faces competition from vehicles like BYD’s Seal, Geely’s Zeekr 001, Nio’s ET5, and Xpeng’s P7i. Xpeng recently introduced zero-interest loans and free upgrades for the P7i.
Tesla also announced plans to showcase the new model at the Munich auto show, potentially overshadowing German automakers like Volkswagen and Mercedes, who are expected to unveil numerous new EVs, partly in response to China’s rapidly evolving EV market.
In China, the starting price for the new Model 3 is 259,900 yuan ($35,807), while in Germany, it begins at 42,990 euros ($46,670). Tesla stated that deliveries in Europe would commence in late October.