Citing people familiar with the matter, a report by Bloomberg is claiming that Tesla is planning to cut the price of its Model 3 cars that will be assembled in China by 20% or more next year. The aimed is said to be aimed at luring buyers amid a slowing electric-vehicle market.
The publication notes that the electric car maker hopes to achieve the price cut by using more local components, that will allow it to import fewer parts and avoid tariffs. Prices of Tesla’s Model 3 sedans, which will be built in a new factory near Shanghai and start at approx. US $50,800, will be lowered from the second half of 2020, said the sources.
“People shop on price — this will help grow the market share of electric vehicles,” said Bill Russo, founder of Shanghai-based consulting firm Automobility Ltd.
Chief Executive Officer Elon Musk is counting on the multibillion-dollar Shanghai plant — Tesla’s first factory outside the U.S. — to give it an edge over the likes of BMW AG and Daimler AG, which are also targeting China with new EV models. Price cuts would also pressure local incumbents such as NIO Inc. and Xpeng Motors to follow suit.
A 20% price cut would drop the starting price of the Model 3 to around US $42,800.