The revised variant 3 was priced 12% higher than the previous, base rear-wheel drive variant in China, the world’s largest auto market and Tesla’s second-largest after the United States.
At the same time, Tesla reduced the pricing of its premium Model S and Model X in China and the United States by 14% to 21%.
Raising the base price of the Vehicle 3, Tesla’s best-selling vehicle after the Y, should help safeguard profits, but price cuts for higher-end models highlighted the ongoing pressure on EV makers, particularly in China, where Tesla launched a price war with its Chinese rivals earlier this year.
Tesla’s upgraded Model 3 was the company’s first revision to its mass-market car lineup since the arrival of its global best-seller, the Model Y, in 2020.
It was also the first time Tesla had released a new model in China before the United States, its home market, and it comes as the company faces increasing price and feature competition from rivals led by bestselling BYD.
Tesla did not specify a debut date for the new Model 3 in the United States, where it is presently offering discounts of more than $5,000 on certain of its inventory vehicles. The Model 3 is also manufactured at the company’s Fremont, California plant.
FIRST DEBUT IN CHINA
Tesla announced the new Model 3 would be unveiled at a trade show in Beijing on Saturday, and several of its new features, such as a rear display for back-seat passengers, appeared to be aimed at Chinese automobile consumers.
According to Tesla, the new model for China also has a stronger acoustic system, a more pleasant cabin, and more airbags. Images of the sedan’s exterior revealed minor alterations such as a sharper front end and new headlights.
The upgraded Model 3 will also have a larger driving range. According to China’s testing requirements, the regular version has a rated range of 606 km (377 miles). This is around 9% more than the base model it replaces in China.
Tesla also stated that the new model would be unveiled at the Munich car show. German automakers are likely to utilize that platform to unveil a slew of new EVs, in part in response to China’s volatile market. These include a new version of the Volkswagen ID.7 and a Mercedes electric CLA model sedan.
THE ‘HIGHLAND’ PROJECT
Reuters initially reported in November that Tesla was working on a redesigned Model 3 under the codename “Highland.” According to those participating in the initiative, the goal is to reduce production costs while increasing the model’s appeal.
Tesla did not provide any information regarding the new Model 3’s battery, but a source familiar with the specifications said it was the same lithium-iron-phosphate (LFP) battery from CATL used in the base model.
The increased range is the result of removing weight and refining the car’s shape to reduce wind resistance, according to the source. Tesla made no immediate remark about the battery.
In China, the Model 3 competes with BYD’s Seal, Geely’s Zeekr 001, Nio’s ET5, and Xpeng’s P71. Just as the new Tesla debuted, Xpeng announced zero-interest loans and free upgrades for that model.
Tesla’s China sales grew by about 49% in the first half of the year, compared to a low base in 2022, when COVID lockdowns hindered production and sales. Model Y sales were more than quadruple those of the Model 3.
Tesla said that it had begun collecting orders for the updated Model 3 and that deliveries would begin in China in the fourth quarter. It has already begun accepting reservations for the new vehicle in other markets where it sells from Shanghai, including in the Middle East, Japan, and Australia.
The latest Model 3 starts at 259,900 yuan ($35,807) in China.