Caixin
Jul 30, 2021 08:05 PM
BUSINESS

Tesla Drops Model 3 Price in China by Over $2,000

What’s new: Tesla Inc. said it has lowered the price of its Model 3 electric cars in China by 15,000 yuan ($2,321) due to reductions in production costs.

The standard version of the Elon Musk-headed firm’s flagship vehicle now retails at 235,900 yuan after subsidies, the automaker said in a press release on Friday.

The move “reflected the realities of cost fluctuations” and Tesla’s commitment to “the principle of public transparency on pricing,” the company said.

Tesla did not specify which areas of its production chain had experienced cost reductions. A person close to the company denied that the price cut was related to a recent series of scandals and safety incidents that have dented the carmaker’s reputation in China.

The background: Earlier this week, Musk said Tesla is making a “long-term shift” toward using cheaper lithium-iron-phosphate batteries in its electric vehicles.

The statement chimes with trends at China’s major cell-makers. On Thursday, Contemporary Amperex Technology Co. Ltd., the world’s biggest battery manufacturer and a Tesla supplier, revealed a new kind of sodium-ion battery that uses cheaper raw materials than those made from lithium-ion metals, Bloomberg reported.

Tesla is basking in the warmth of an earnings report earlier this week showing that the company weathered supply chain difficulties in the three months through June to improve its profit margins and rake in higher-than-expected revenues.

The California-headquartered automaker leads China’s luxury EV market. It sold 28,138 cars in the country in June, a decline of 15.9% on the previous month but more than three times as many as its main domestic rival Nio Inc., according to figures (link in Chinese) published on Thursday by the China Passenger Car Association.

Tesla has continued to enjoy strong sales in China despite a torrid few months in the Asian nation. Last month, the government ordered the company to fix a safety issue affecting almost all the cars it had sold there.

That setback followed a viral protest against the carmaker at a major Shanghai auto show in April and came amid a spate of crashes and concerns about the way the company collects and stores data.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com) and editor Heather Mowbray (heathermowbray@caixin.com)

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