With New Factory Coming Online, Tesla Looks to Slash Prices in China

The country’s new car market might be in a state of turmoil, but Tesla’s plans for China haven’t changed. It still wants to capture a big chunk of the country’s “new energy” vehicle market, and the creation of a wholly owned assembly plant, plus a range of local suppliers, makes the company’s goal a near certainty.

As it struggles to ramp up production at its Shanghai facility, Tesla plans to go on a price-slashing spree in 2020, a report claims.

According to sources who spoke to Bloomberg, the inflated prices of Chinese-market Tesla Model 3s could get a serious haircut in the second half of next year. We’re talking the potential for a 20-percent price cut for a car that currently starts at $50,800.

Such a cut would bring the model’s base price below $43,000, giving it an edge over many foreign competitors, as well as a number of domestically produced EVs.

The Model 3 is by far Tesla’s best seller regardless of market (LMC Automotive claims the company sold a total of 10,542 cars in China in Q3 2019), and the Shanghai plant is tasked with building the company’s entry-level model in great numbers, thus avoiding an expensive boat trip (and import tariffs) while freeing up capacity in Fremont, California. The automaker received regulatory approval to start production in October, though actual deliveries to Chinese buyers might only take place in the coming few days. (Earlier this year, Tesla said it expected to build 1,000 Model 3s per week at the new plant, so the clock’s running out on that promise.)

Helping Tesla’s Chinese manufacturing venture are two new battery suppliers. The first, LG Chem, has a factory not far from Shanghai. The other, China’s Contemporary Amperex Technology Co, could begin supplying battery cells as early as 2020, sources tell Bloomberg.

Another helping hand comes by way of the Chinese government, which recently made locally-built Model 3s eligible for a state subsidy of up to $3,500.

[Image: Tesla]