Tesla Inc. unveiled the first refresh of its popular Model 3 sedan with a sleeker look and longer range, but with a heftier-than-expected price tag in China where the EV maker coming under increased pressure from local rivals.
(Bloomberg) — Tesla Inc. unveiled the first refresh of its popular Model 3 sedan with a sleeker look and longer range, but with a heftier-than-expected price tag in China where the EV maker coming under increased pressure from local rivals.
The new iteration of the four-door sedan has a single-charge range of 606 kilometers (377 miles) and will be priced from 259,900 yuan ($35,800) in Asia’s biggest economy. That’s 12% more than the older version, which used to sell from 231,900 yuan and had 556 kilometers of range.
Tesla has changed the exterior design and lights for a more sporty look, updated the suspension and added a screen for rear passengers. The new model is live on all order sites in China, Europe, the Middle East and Australia, yet still not on the US market.
Analysts were looking for a lower price tag in China that could help the company defend its leading EV position, which is under growing threat from domestic rivals like BYD Co. — which aims to sell 3 million vehicles this year — and Nio Inc. and Xpeng Inc., which are expanding their lineups with cars tailored to local tastes.
Read more: Elon Musk Expects Tesla’s Main Rival Will Be a Chinese EV Maker
Deliveries from Tesla’s Shanghai factory fell to the lowest level this year in July. Tesla has since cut prices further, fueling concerns of a renewed front in a bruising price war that has eroded profit margins.
Read more: Tesla Started a China Price War That May Destroy Some Carmakers
Meanwhile, Tesla’s Model Y sport utility vehicle, a bigger and roomier pure-electric model that can drive 545 kilometers on one charge, is priced from 263,900 yuan in China, only about $550 higher than the current Model 3.
Local rivals including Xpeng and Zeekr brand under Geely Automobile Holding Ltd. have also aggressively marked down prices and launched new products to compete directly against Tesla, while Nio plegded to launch the first product of its new mass market brand as soon as 2024.
“Tesla has discovered that to win in China’s hyper-competitive EV market, you must race faster than anywhere else in the world,” said Bill Russo, a former Chrysler executive who’s now chief executive officer of Automobility Ltd., a Shanghai-based consultancy.
Selling a model that hasn’t been updated in six years in such a market is the automotive equivalent of buying an older iPhone, he said, adding it will be “very challenging” to sustain a higher price point for the new version and still sell significant volumes.
“If you’re not the latest and greatest, you are left with price discounts as your only weapon,” he said.
Musk first unveiled the Model 3 to enormous fanfare in March 2016, but famously faced several months of “production hell” as the company struggled to ramp up production in 2018.
–With assistance from Sean O’Kane and Dana Hull.
(Updates with analyst comment in 8th paragraph.)
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