Tesla Inc. cut the starting price of its China-built Model 3 sedans by 9 percent, as it steps up efforts to lure customers in the world’s biggest electric-vehicle market after opening a factory on the outskirts of Shanghai.
The price was lowered to 323,800 yuan ($46,500) from 355,800 yuan ($51,000). After subsidies from the Chinese government, prices start from 299,050 yuan ($42,900), Tesla’s website showed. That puts the cars closer to some produced by domestic EV makers, such as Xpeng Motor’s latest P7 sedan, which starts at 240,000 yuan. Nio Inc.’s electrified utility vehicles start from as high as 358,000 yuan.
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 Tuesday, 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.
Musk has said weekly production of 3,000 cars in Shanghai is a target at some point.
Tesla plans to increase local sourcing to 100 percent in Shanghai by the end of the year, from about 30 percent now, Song said. That should help lower costs as Tesla and other ambitious EV makers face a challenging market in China, where auto sales have been slowing.
Last month, people familiar with the matter said localization would help Tesla cut prices by 20 percent or more in 2020. The company has been exempted from a 10 percent purchase tax for its locally built sedans, posing more of a threat to the likes of Nio, Xpeng and BYD Co.