Please ensure Javascript is enabled for purposes of website accessibility

Tesla Cuts Price of Chinese-Made Model 3

By John Bromels – Oct 1, 2020 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Thanks to a new battery, the base price drops below $37,000.

Taking advantage of new battery options and big government subsidies, Tesla (TSLA 0.25%) has slashed its Model 3 prices in China. The company's Chinese website is now advertising a base price for the popular battery-electric sedan of 249,900 yuan, or roughly $36,800.

While this is big news for the company in its efforts to remain dominant in the Chinese market, U.S. consumers won't be least, not yet. 

A Tesla Model 3 with a cityscape in the background.

Image source: Tesla.

Race to the bottom dollar

The new price of the Shanghai-made Model 3 Standard Range Plus represents an 8% discount to the previously listed price of 271,550 yuan, or about $40,000. Tesla factors in Chinese government subsidies for electric vehicles (EVs) when it calculates the base price. 

In the U.S., the base price for the Model 3 Standard Range Plus is $37,990, making the Chinese Model 3 slightly cheaper than the U.S. version. That's largely due to superior government incentives. U.S. federal tax credits for Tesla's EVs were phased out at the beginning of this year. However, Tesla's website claims that "potential incentives" could reduce the U.S. price even further.

Lower price, higher range

Tesla was also able to cut the price by using a different kind of battery

The automaker received approval from the Chinese government in June for the authority to build Model 3s at its Shanghai Gigafactory using lithium iron phosphate (LFP) batteries. LFP batteries are cheaper than Tesla's preferred nickel cobalt aluminum (NCA) batteries because they don't use cobalt, a rare and expensive -- not to mention controversial -- metal.

LFPs, though, are less energy-dense than NCAs, which can affect performance. However, along with the price cut, Tesla bumped the Chinese model's range from 445 km to 468 km, about 290 miles. The U.S. version's range is still listed as 250 miles. 

John Bromels owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$276.01 (0.25%) $0.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.