A Little Trouble in Big China? Tesla Prices Model 3 for Upmarket Tastes
Eager to minimize import costs, Tesla has made impressive progress laying down roots in China. The company secured a long-term lease on a 210-acre site near Shanghai in October of 2018. Ground was broken at the start of January, with the $5 billion facility estimated to begin producing cars as early as this November. While all of this effort was aimed at expanding the brand in Asia while minimizing costs, it’s not translating into a cheaper Model 3 for the Asian market.
Tesla, being Tesla, has decided to launch the Model 3 with a starting MSRP of $50,000. According to Bloomberg, that’s only 3 percent less expensive than the versions it had to ship across the ocean. Rather than attempting to build more budget-conscious variants, the automaker decided to offer all vehicles sold in China with Autopilot and additional standard content.
From Bloomberg:
The first Tesla vehicles to be produced outside the U.S. are part of Chief Executive Officer Elon Musk’s efforts to expand in Asia and take on local electric-vehicle upstarts. The pricing suggests Musk is trying to maintain Tesla’s premium image in the world’s largest auto market, leaving local competitors to compete for buyers of cheaper EVs.
“It might affect the choices of some potential customers, but not much,” said Yale Zhang, the founder and CEO of [the Shanghai based] consultancy AutoForesight. “The product’s target group is not that price-sensitive compared with those choosing much cheaper ones.”
While the Model 3 can be sourced in America below $40k, those exported to China typically cost $51,500. There’s no way there aren’t a few thousand Chinese shoppers that will be disappointed to learn their home-grown variants will be priced roughly the same — even if they come with a bit more content. But this is Tesla, a company that likes to lead with its more-extravagant products. Asia probably should have seen this coming.
Will the strategy play for the first foreign-controlled automotive assembly plant in China? Maybe. Leaning upon pricier models seems to have worked for Tesla in the past, but the company faces a lot more electrified competition in the PRC. Government influence has created countless EV brands in China and encouraged established carmakers to embrace electrification more than they have in the West.
Bloomberg noted that local rivals will be able to undercut Tesla’s pricing by significant margins, with even the higher-end firms remaining competitive. For example, NIO sells the all-electric ES6 crossover for around $47,800 in China. It’s quite a big bigger than the Model 3 while offering similar range and its own unique traits ( like a cute digital assistant). That could force Tesla to go all in on its premium image, hoping that China responds favorably.
Tesla claims Chinese-made variants of the Model 3 will go on sale in the first quarter of 2020 — all of them with Autopilot.
[Image: B.Zhou/Shutterstock]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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Don't make at premium cars cost 3 times as much over there compared to the US? Wouldn't that make the Tesla a bargain?
The picture: It looks like they found the paint defect(s). [I see two fingers pointed.]