Tesla placed pressure on rivals on Friday by introducing a redesigned Model 3 with a greater driving range in China and other export markets for its Shanghai manufacturing, including Europe.
Tesla launches new Model 3: The updated version of the Model 3 had a starting price that was 12% higher than the previous, base rear-wheel drive model in China, the largest auto market in the world and Tesla’s second-largest market after the United States.
Further, Tesla simultaneously reduced the cost of its high-end Model S and Model X in China and the US by approximately 14% to 21%.
Raising the base price of the vehicle 3, Tesla’s best-selling vehicle after the Y, could help safeguard profits, but the price reduction for its more expensive models highlighted the ongoing pressure EV manufacturers face, particularly in China where Tesla earlier this year launched a price war with its Chinese rivals.
Since introducing its current best-seller, the Model Y, in 2020, Tesla’s first modification to its mass-market automobile lineup was the revised Model 3.
Additionally, it was the first time that Tesla had introduced a new model outside of its home market of the United States. This comes as rivals, led by the market leader BYD, are increasingly challenging Tesla on pricing and features.
In the U.S. market, where it is presently providing discounts of more than $5,000 on some of those vehicles in inventory, Tesla did not disclose a launch date for the new Model 3. The company’s factory in Fremont, California also produces the Model 3.
China makes its debut
The updated Model 3 will be unveiled by Tesla at a trade show in Beijing on Saturday, and several of its new features, including a rear display for passengers in the back seats, appear to be targeted at Chinese automobile consumers.
According to Tesla, the revised model for China also has more airbags, a more pleasant cabin, and a better acoustic system. Images of the sedan’s exterior revealed minor adjustments that gave it a more streamlined front and new headlamps.
A longer driving range is another promise made by the new Model 3. According to China’s testing requirements, the regular version has a rated range of 606 km (377 miles). That is a 9% price increase over the Chinese base model it replaces.
Tesla has announced that they will also showcase the new model at the car show in Munich. German automakers are expected to utilize that platform to unveil a series of new electric vehicles in response to China’s rapidly evolving market. These include an updated Volkswagen ID.7 and a new Mercedes CLA type electric vehicle.
‘Highland’ Project
The first information about Tesla creating a new Model 3 under the codename “Highland” came from Reuters in November of last year. The project’s participants said that its objectives were to reduce production costs and increase the model’s appeal.
Tesla did not provide any information regarding the battery in the new Model 3, but someone familiar with the features claimed that they used the same lithium-iron phosphate (LFP) battery from CATL in the base model.
The speaker said, “The higher range is the result of removing weight and improving the car’s profile so it faces less wind resistance.” Tesla didn’t immediately respond to a question concerning the battery.
The Model 3 faces competition in China from the BYD Seal, Geely’s Zeekr 001, Nio’s ET5, and Xpeng’s P71. Just as the new Tesla made its debut, Xpeng announced no interest loans and free upgrades for that model.
Comparing the first half of 2018 to a low base in 2022, when COVID lockdowns delayed production and sales, Tesla’s China sales grew by about 49%. Sales of the Model Y were more than twice as high as those of the Model 3.
Tesla said that it had begun collecting orders for the updated Model 3 and that deliveries to China will start in the fourth quarter. Additionally, it started accepting bookings for the new vehicle in other export destinations from Shanghai, such as the Middle East, Japan, and Australia.
The latest Model 3 costs 259,900 yuan ($35,807) in China.