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Tesla cuts price on China-built Model 3 ahead of launch
Reuters | 2019/6/4

BEIJING -- Tesla Inc. said on Friday it would price the China-made Model 3 starting at 328,000 yuan ($47,529), 13 percent below the sticker of Model 3s the electric-vehicle maker now imports as it pushes sales in the fast growing market.

The carmaker is building a factory in China, with initial output dedicated to the Model 3. Pre-orders for the Model 3 built in China started 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 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.

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

"The price drop is to make Tesla more accessible," the company 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 percent in China.

Crucial production
Doubts about the Model 3s production levels 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. tariffs, which has forced the EV maker to adjust prices of U.S.-made vehicles in China.

Keeping prices in check will also help Tesla fend off competition from a swath of domestic EV startups such as Nio Inc., Weltmeister and XPeng Motors, as well as established carmakers including Volkswagen Group 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 light-vehicle 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 recruiting drive last week for manufacturing and logistics workers.

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

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