Screenshot of Tesla Design Studio
As we reported yesterday, Tesla was expected to add the locally made Model 3 Long Range (rear wheel drive edition) to its lineup soon to reduce pricing on that option. Tesla surprised us by releasing a locally made Model 3 Performance also! The plans to make these locally in China were probably accelerated by the shutdown in Fremont and the excellent sales reported yesterday in China for Tesla for March.
The locally made Model 3 Long Range is 100,000 yuan cheaper than the imported model after adjusting for the subsidies it qualifies for. That is equivalent to $14,200 at today’s exchange rates! Demand doesn’t seem to be as large in China for all-wheel-drive models, so Tesla offers the Model 3 Long Range in a rear-wheel-drive configuration to save the consumer money. The Model 3 Performance won’t be available till 2021, but it offers even larger savings over the imported model. The pricing of that model started at 560,000 yuan last year, so the 419,000 yuan price is 140,000 yuan or about $20,000 cheaper. This will put incredible pressure on the big 3 German competitors (BMW, Mercedes, & Audi).
Conclusion
Tesla has great sales and production momentum in China and it is clear to me that it wants to take advantage of its Shanghai factory success to grab market share while there are no competitors that can match Tesla’s offerings. It should also cushion the financial blow of the long shutdown of production in the US.
This swift action also means that we might be surprised by a locally produced Model Y sooner than the 2021 date expected.
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