Tesla Promotes Lower Priced China-Made Model 3 In Sales Push

U.S. electric vehicle (EV) maker Tesla Inc said on Friday it would price its China-made Model 3 vehicles from 328,000 yuan ($47,529), 13% cheaper than those it currently imports as it pushes sales in the fast growing market.

The carmaker has been building a factory in China since January where it its initial output will be Model 3 cars. Pre-orders for the vehicles will also start on Friday, the company said on its website.

The "standard range plus Model 3" is 49,000 yuan cheaper than China's current cheapest version, also standard range plus, even though it remains unclear whether the carmaker will qualify for China's subsidies for new energy vehicles.

The starting prices for five different versions of China-made Model 3s range from 328,000 to 522,000 yuan. Customers can expect to receive the car in 6-10 months, the company said in a press release.

It also said buyers will only need to put down a deposit of 20,000 yuan and that financing options on offer meant that monthly payment instalments will start from 1,100 yuan.

"The price drop is to make Tesla more accessible," it said.

The higher-end version of the Model 3 will still be imported from the United States.

Investors are focused on whether the gross profit margin on the Model 3 will remain around 20% in China.

CRUCIAL PRODUCTION

Doubts about the Model 3's production rate and sales performance have hit Tesla's share price in recent months.

Producing cars locally is likely to help Tesla minimize the impact of Sino-U.S. tit-for-tat import tariffs, which has forced the EV maker to adjust prices of its U.S.-made cars in China.

Keeping prices in check will also help Tesla fend off competition from a swathe of domestic EV startups such as Nio Inc, Weltmeister and XPeng Motors, as well as established carmakers including Volkswagen AG and General Motors Co.

Tesla's so-called Gigafactory is China's first wholly foreign-owned car plant and is seen as a reflection of the country's broader shift to open up its car market.

Pictures of the Shanghai plant posted on Tesla's social-media account showed construction of its main section was nearly done. The company also held a recruitment event this week for car manufacturing and logistics workers.

Tesla forecast its deliveries in 2019 would reach 360,000 to 400,000 vehicles and said it may produce as many as 500,000 vehicles if its China factory reaches volume production in the fourth quarter.