On May 27, Tesla posted this enigmatic announcement on its Weibo Chinese social media account:
Naturally, everyone is buzzing about what the announcement could be. It could certainly be something about the Shanghai factory. Elon Musk says that facility will begin turning out cars before the end of the year and there are reports the company is already hiring the workers who will build the cars.
Or it could be an announcement about which companies will make the battery cells for the cars manufactured in Shanghai.
Bloomberg may have the answer. According to its sources, who prefer to remain anonymous, Tesla is about to announce that prices for the Model 3 in China will start at 300,000 yuan, or about $43,000. At present, the Model 3 in the Chinese market starts at 377,000 yuan, or $54,555.
Of course, the current price is inflated by the 25% import duty China now imposes on all US-made cars as a result of the tit for tat trade war initiated by alleged president Don the Con Trump. Locally produced cars will not be subject to any such tariffs. All prices listed above are before any national or local EV incentives, which in China can be significant.
Prior to the latest round of tariff hikes when the import duty was 10%, CleanTechnica reported that Model 3 deliveries in China were at 1,000 per day or more. It is difficult to get accurate delivery numbers for China, but it is reasonable to assume sales momentum has been slowed somewhat by the increased tariffs that went into effect a few weeks ago.
Most observers expect the cars made in China will cost less to manufacture than those made in the Fremont factory, and of course there will be no costs associated with shipping the cars across the Pacific. So there’s a chance the starting price for Chinese-made cars will be lower than Bloomberg anticipates. Tesla has declined to offer any further details, so we will have to wait until Friday to find out what the big announcement is really all about.
Based solely on my back-of-the-envelope calculations and a healthy dollop of “I have no idea what I am talking about,” I am guessing the news from Tesla on Friday will reveal the base version of the Chinese-made Model 3 will cost right around $40,000 before incentives.
Of course, there’s a possibility savvy Chinese buyers will skip ordering low-trim imported Model 3s and wait for the lower-priced domestically produced cars to arrive, which could put a crimp in Tesla’s sales in China for a while. But 6 months of pain will be worth a lifetime of gain, as the Chinese market is expected to be one of Tesla’s largest markets going forward.
Putting price aside, Chinese customers have a strong preference for locally made products. They also are attracted to high-quality, technologically advanced products. “Elon Musk can design special products that capture people’s hearts. By contrast, the electric cars designed in China are boring,” says Beijing auto analyst Jia Xinguang. “Chinese electric cars are not as fun.”
Check back with us after the Friday announcement to see whether anything we say here turns out to be true. It could be Tesla has something altogether different in mind. “We’ll see,” said the Zen master.
Oh, here’s this now, too:
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