SHANGHAI, China: In a bold move that has sent ripples through the electric vehicle (EV) market, Tesla unveiled a restyled version of its beloved Model 3, accompanied by strategic pricing adjustments aimed at solidifying its position as a major player in China and export markets worldwide.
This revamp marks Tesla’s first significant update to its mass-market Model 3 since the introduction of the Model Y in 2020. What makes this launch even more noteworthy is that it debuted in China before the United States, where the automaker originally hails from.
Pricing Strategies: Higher Base Price and Price Cuts
The most eye-catching aspect of this unveiling is the base price of the updated Model 3 in China, the world’s largest auto market and Tesla’s second-largest market after the United States. The starting price for the refreshed Model 3 in China is 12% higher than the previous base rear-wheel drive model. This strategic pricing decision could help protect Tesla’s margins amid the ever-competitive EV market landscape.
Conversely, Tesla announced significant price cuts in both China and the United States for its premium models, the Model S and Model X, ranging from about 14% to 21%. These price reductions are indicative of the ongoing price war ignited by Tesla and its Chinese competitors earlier in the year. This demonstrates the intense competition faced by EV manufacturers, especially in China, where Tesla has been a key disruptor.
Enhancements and Features
The updated Model 3 boasts several enhancements, some of which are tailored to the discerning Chinese market. These include a rear display for back-seat passengers, improved acoustics, a more comfortable interior, and additional airbags. Exterior modifications provide the sedan with a sleeker front and new headlights, enhancing its aesthetics and appeal.
One of the most notable improvements is the extended driving range. The standard version of the Model 3 now offers a rated range of 606 kilometers (377 miles) according to China’s testing standards, which is approximately 9% higher than the outgoing base model. This increased range is achieved by reducing the car’s weight and optimizing its aerodynamic profile to minimize wind resistance.
China-First Debut
Tesla unveiled the new Model 3 at a trade fair in Beijing, showcasing features aimed at catering to the preferences of Chinese car buyers. This China-first approach underscores the significance of the Chinese market to Tesla’s global strategy. Additionally, Tesla plans to showcase the new Model 3 at the Munich auto show, an event where German automakers are expected to introduce a lineup of new EVs in response to China’s rapidly evolving EV market.
Project “Highland” and Battery Details
This updated Model 3 is the result of a project codenamed “Highland,” which aimed to reduce production costs and enhance the model’s appeal. While Tesla did not disclose specific details about the new Model 3’s battery, it is reported to use the same lithium-iron phosphate (LFP) battery from CATL as the base model. The improved range was achieved through weight reduction and aerodynamic enhancements, further optimizing efficiency.
Intensified Competition in China
In China, the Model 3 faces fierce competition from domestic automakers like BYD, Geely, Nio, and Xpeng, each offering their unique selling points and features. Xpeng, in particular, responded to Tesla’s launch by offering zero-interest loans and free upgrades for its P71 model.
Future Prospects
Tesla’s sales in China surged nearly 49% in the first half of the year, a remarkable feat considering the disruptions caused by the COVID-19 pandemic in 2022. Notably, sales of the Model Y surpassed those of the Model 3 during this period. Tesla has already started accepting orders for the updated Model 3 and plans to commence deliveries in China during the fourth quarter. Pre-orders are also open in other export markets from Shanghai, including the Middle East, Japan, and Australia, indicating Tesla’s commitment to expanding its global footprint.
In China, the base model of the new Model 3 starts at 259,900 yuan ($35,807), making it an attractive option for consumers seeking a high-quality electric vehicle with an extended range and premium features. Tesla’s latest moves demonstrate its agility in navigating the dynamic and fiercely competitive EV market, both in China and beyond.
