Market Share: Tesla Model 3 Sees Lower Chinese Pricing
Next week, Tesla Motors will begin deliveries of its Shanghai-made Model 3 to Chinese customers — who stand to get a bit of a deal on them. Unlike Western markets, China is already loaded with local companies manufacturing electric vehicles and Tesla doesn’t want to lose out on market share simply because it priced its vehicles too high.
Originally, the manufacturer intended on selling introductory Model 3s at 355,800 yuan ($51,000 USD) a pop. That was soon lowered to 323,800 yuan ($46,500) to pull shoppers from automakers like BYD, NIO and Xiaopeng Motors. Broad profit margins are nice, but the Chinese EV market is too crowded for the brand not to focus on market share.
According to Automotive News, government subsidies will further lower the cost of the Model 3 (Standard Range Plus with Autopilot) to the American equivalent of $42,900 — keeping the car’s overall fee in the center of China’s premium, new-energy vehicle market. Tesla has handled the region differently by offering racing events and parties aimed at creating a buzz around the brand.
From Automotive News:
California-based Tesla, which handed over the first of its Chinese-made cars to 15 employees on Dec. 30, will start delivering local models to the public on Jan. 7, it said on its official WeChat account. That’s just one year after breaking ground at the Shanghai plant, Tesla’s first factory outside the U.S.
“This price cut shows Tesla’s confidence in cost control and determination in rapidly expanding its market share,” said Yale Zhang, managing director of Autoforesight, a Shanghai-based consultancy.
Elon Musk’s company is also lowering the cost of optional extras, from body color to high-performance wheels, according to a statement. Home-charging services aren’t included, and cost an extra 8,000 yuan. Tesla is already assembling more than 1,000 cars a week at its China facility and plans to double that rate over the year, according to Song Gang, the manufacturing director of the plant.
Tesla is also reportedly interested in localization, believing it will eventually help it cut prices by 20 percent (if not more) by the end of 2020. Since the Ministry of Industry and Information Technology has confirmed that Tesla’s Chinese-manufactured products are not subject to the nation’s 10 percent purchasing tax, it should be able to mix it up with the region’s domestic nameplates rather well in the coming years. Ultimately, Tesla hopes to manufacture 3,000 vehicles per month in Shanghai. Presumably, CEO Elon Musk aims to hit that target after the upcoming Model Y begins assembly, but the official timeline for the production ramp-up is anybody’s guess.
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- ToolGuy 2019 had better comments than 2023 😉
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