Visitors check out a Tesla Model 3 car at a showroom of the U.S. electric vehicle (EV) maker in Beijing, China, February 4, 2023. Portal/Florence Lo Acquire License Rights
SHANGHAI, Sept 1 (Portal) – Tesla (TSLA.O) on Friday unveiled a redesigned Model 3 with greater range in China and other export markets for its Shanghai factory, including Europe, putting pressure on rivals.
In China, the world’s largest automobile market and Tesla’s second largest after the United States, the updated version of the Model 3 was available at a starting price 12% higher than the previous rear-wheel drive model.
At the same time, Tesla reduced the prices for its premium Model S and Model X models in China and the USA by around 14 to 21 percent.
An increase in the base price of the Model 3, Tesla’s best-selling model after the Y, could help protect margins, but the price cuts for the high-end models underscored the ongoing pressure facing electric vehicle makers, particularly in China, where Tesla sparked a price war with its Chinese rivals earlier this year.
The updated version of the Model 3 was Tesla’s first change to its mass-market car lineup since the launch of its global bestseller, the Model Y, in 2020.
It was also the first time that Tesla launched a new model in China ahead of its home market of the United States, at a time when the company is facing increasing price and features competition from rivals led by bestseller BYD (002594 .SZ).
Tesla did not announce a launch date for the new Model 3 in the US market, where it is currently offering discounts of more than $5,000 on some of the vehicles in inventory. The company also produces the Model 3 at its factory in Fremont, California.
CHINA FIRST DEBUT
Tesla said it would unveil the new Model 3 at a trade show in Beijing on Saturday, and some of its new features, including a rear display for back-seat passengers, appeared to be aimed at Chinese car buyers.
Tesla said the new model for China also features a better acoustic system, a more comfortable interior and additional airbags. Exterior images showed small changes that gave the sedan a slimmer front and new headlights.
The new Model 3 also promises a greater range. The standard version has a rated range of 606 km (377 miles) based on Chinese testing standards. That’s about 9% more than the base model it replaces in China.
Tesla announced that it would also show the new model at the Munich auto show. German automakers are expected to use this phase to announce a range of new electric vehicles, partly in response to the rapidly changing market in China. These include a new version of the Volkswagen (VOWG_p.DE) ID.7 and a new electric sedan of the CLA model from Mercedes (MBGn.DE).
PROJECT “HIGHLAND”
Portal first reported last November that Tesla was developing a redesigned Model 3 in a project codenamed “Highland.” People involved in the project said it aims to reduce production costs and increase the model’s appeal.
Tesla didn’t provide details about the new Model 3’s battery, but a person with knowledge of the characteristics said it was the same CATL lithium iron phosphate (LFP) battery (300750.SZ) for the base model.
The increased range is the result of reducing weight and improving the vehicle’s profile so it faces less wind resistance, the person added. Tesla initially had no comment on the battery.
In China, the Model 3 competes with BYD’s Seal, Geely’s Zeekr 001 (0175.HK), Nio’s ET5 (9866.HK) and Xpeng’s P71 (9868.HK). Xpeng announced interest-free loans and free upgrades for this model just as the new Tesla was launched.
Tesla’s sales in China rose nearly 49% in the first half of the year, compared with low levels in 2022 when COVID lockdowns disrupted production and sales. Sales of the Model Y were more than double those of the Model 3 during this period.
Tesla said it has started accepting orders for the new Model 3 and will begin deliveries in China in the fourth quarter. The company also began accepting reservations for the new car in other markets it exports to from Shanghai, including the Middle East, Japan and Australia.
In China, the new Model 3 starts at 259,900 yuan (US$35,807).
($1 = 7.2582 Chinese Yuan Renminbi)
Reporting by Zhang Yan in BEIJING, Hyunjoo Jin in SAN FRANCISCO and Daniel Leussink in TOKYO, Brenda Goh in SHANGHAI; Edited by Christian Schmollinger and Kevin Krolicki and Miral Fahmy
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