Tesla drops Model 3 prices in China to benefit from EV subsidies
China recently updated requirements for automakers to earn the subsidies, and the Model 3 was too expensive to qualify.
Tesla wouldn't want to miss out on the Chinese government's generous incentives for what it calls a "new energy vehicle," so the electric carmaker made sure it will still qualify.
After China updated requirements for buyers and automakers to take advantage of the incentives late in April, Tesla's lineup was a touch too expensive. As of Thursday, Tesla went ahead and cut prices to meet the price ceiling, Reuters reports. Prices dropped by 10% to 271,550 yuan, or about $38,000 at current exchange rates, for a Model 3 Standard Range, the automaker's Chinese website shows. This new price includes the government incentives. Just a couple weeks ago, buyers faced a price of 303,550 yuan for the same car.
China now requires a sale price under 300,000 yuan to qualify for the incentives, a 10% cut from the previous regulations. Next year, the government will drop the price ceiling another 20% as it continues to end support for EV purchases.
Tesla added two new cars to the Model 3 lineup as it focuses on delivering cars made at its Shanghai-based factory. Now, the Model 3 Long Range and Performance variants are built locally in China. They also avoid any import tariffs. The previous shifts essentially saw Tesla reduce prices by 16% previously as it reconfigured its local lineup.
In the future, CEO Elon Musk said he wants to see Model Y production also start at the plant in Shanghai, but surely, looser incentives loom large over the automaker.
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