Tesla sharply reduced the prices for its Made-in-China (MIC) Model 3 and Model Y cars in China in an attempt to boost sales.

This is the second price reduction in China within just over two months (the first one was 5-9 percent in late October), and as far as we know, the most significant one to date.

Before we jump into details, let's note that the company sold fewer cars in China in December than a year ago, had a production break in December and plans another break in  January (according to Reuters), and has to deal with the end of EV subsidies in China from January 1, 2023 - 11,088 CNY ($1,635) for the most affordable BEV models. All of that is combined with increasing competition in the electric car segment and a challenging economy, which caused a fast decrease in the estimated order backlog.

As of January 6, 2023 prices of all Tesla Model 3 and Tesla Model Y from the Giga Shanghai plant were lowered in China.

The scale of price cuts varies depending on the version - from 5.7 percent to 13.5 percent - on the consumer level (from the previous price, after subsidies). However, on the manufacturer level (what the company gets for its cars) the drop is as high as 17 percent (from a pre-subsidy price of the Tesla Model 3 RWD).

This is a very significant difference, especially considering the previous price reduction in October, and the Tesla cars in China are now more affordable than ever.

Tesla Model 3/Model Y prices in China:

  • Model 3 RWD (LFP): 229,900 CNY ($33,899) - down 47,088 CNY or 17.0%
    (from 276,988 CNY before subsidies)
    [including subsidies, the price cut is 36,000 CNY or 13.5%]
  • Model 3 Performance: 329,900 CNY ($48,644) - down 20,000 CNY or 5.7%
    (from 349,900 CNY)
  • Model Y RWD (LFP): 259,900 CNY ($38,322) - down 40,088 CNY or 13.4%
    (from 299,988 CNY before subsidies)
    [including subsidies, the price cut is 29,000 CNY or 10.0%]
  • Model Y Long Range AWD: 309,900 CNY ($45,695) - down 48,000 CNY or 13.4%
    (from 357,900 CNY)
  • Model Y Performance: 359,900 CNY ($53,067) - down 38,000 CNY or 9.6%
    (from 397,900 CNY)

We guess that this move will have a big impact on Tesla's results in China, but also might make the competition in the BEV segment more fierce (more on that in the next post).

Some interesting input about the price cuts comes from Grace Tao, Tesla's vice president of external affairs (see Weibo post here), explaining that the price adjustments are a result of "countless engineering innovations." In other words, cost-savings allowed Tesla to lower prices. Well, we do not doubt that Tesla is reducing costs, but we also know that the price is not a direct function of cost, but a result of supply and demand.

Tesla offer in China - January 9, 2023

Tesla Model 3

MIC Tesla Model 3 RWD (LFP):

  • Price: 229,900 CNY ($33,899)
  • Range (CLTC): 556 km (346 miles)
  • 0-100 km/h (62 mph) in 6.1 seconds
  • top speed of 225 km/h (140 mph)

MIC Tesla Model 3 Performance:

  • Price: 329,900 CNY ($48,644)
  • Range (CLTC): 675 km (420 miles)
  • 0-100 km/h (62 mph) in 3.3 seconds
  • top speed of 261 km/h (162 mph)

Tesla Model Y

MIC Tesla Model Y RWD (LFP):

  • Price: 259,900 CNY ($38,322)
  • Range (CLTC): 545 km (339 miles)
  • 0-100 km/h (62 mph): 6.9 seconds
  • top speed of 217 km/h (135 mph)

MIC Tesla Model Y Long Range AWD:

  • Price: 309,900 CNY ($45,695)
  • Range (CLTC): 660 km (410 miles)
  • 0-100 km/h (62 mph): 5.0 seconds
  • top speed of 217 km/h (135 mph)

MIC Tesla Model Y Performance:

  • Price: 359,900 CNY ($53,067)
  • Range (CLTC): 615 km (382 miles)
  • 0-100 km/h (62 mph): 3.7 seconds
  • top speed of 250 km/h (155 mph)
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