Soaring demand for Model 3 in China

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Tesla cut the price of its Model 3 fastback sedans manufactured in China by up to 10%. All this comes against direct backdrop of the automaker announcing production of cobalt-free, lithium-iron-phosphate (LFP) batteries. 

At the moment, Model 3 sedans made at Tesla’s Shanghai Gigafactory use nickel-manganese-cobalt (NMC) batteries. 

As a result, demand for Model 3s is rapidly spiking in China.

Model 3 Price Change in China

A standard, chinese-made Model 3 now has a base price of ¥249,900, after factoring in government subsidies. It is the equivalent of U.S. $36,800 at current exchange rate. Model 3 previously cost ¥271,550, or about $39,900.

The upgraded Model 3s also got price cuts. After subsidies, the long-range is now retailing at ¥309,900, or $45,640 at current exchange rates. It previously retailed at ¥344,050, or approximately $50,670.

Consequence: Spike in Demand for Model 3

As a result of the recent price adjustments, Tesla stores in the country are experiencing a sharp rise in demand and orders.

Price cuts came into effect yesterday on October 1. According to Twitter user @ray4tesla, Tesla stores are now overrun by new Model 3 orders. Additionally, the user reported that employees now hardly have time to eat meals or handle conversations with customers.

Model 3 Demand: What it Means for Tesla

Tesla has been selling EVs in China for a number of years already. The company’s vehicles, namely Models S and X however, were out of the price range of most retail buyers.   

This trend started to change after the introduction of Model 3 in 2017, and the construction of the Gigafactory in Shanghai. As a result, Tesla cars became more affordable over time.

Additionally, the recent price adjustments were also implemented for another key reason. Chinese authorities have recently extended their subsidy policy for EVs, up to a certain price bracket.  

Tesla were thus encouraged to slash the price of their Model 3s, to help them fall in the bracket that is valid for subsidies.  

From a competitive standpoint, this move makes sense. It ensures that potential buyers do not opt to purchase EVs produced by competing firms. 

As a whole, all signs point to Tesla further asserting itself in the Middle Kingdom.


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