SHANGHAI/SAN FRANCISCO, Sept 1 (Reuters) – Tesla (TSLA.O) shares fell nearly 6% on Friday after the electric automaker unveiled a redesigned, Chinese-made Model 3 at a higher price, while cutting prices and prices of its luxury cars. Full Self-Driving (FSD) programme.
The launch of the new Model 3 sedan marks the first time the automaker has launched a vehicle in China before the United States, underscoring its increasing reliance on the country as it competes for market share with BYD (002594.SZ). .
The car is manufactured at Tesla’s Shanghai factory and comes with a starting price that is 12% higher than the previous base model in China. It will also be exported to other markets in Asia, Europe and the Middle East.
Raising the base price on the Model 3, Tesla’s best-selling Model after the Y, could help protect margins. But the price cuts for its luxury cars highlight the intense competition electric car makers face, especially in China.
The Elon Musk-led automaker began a price war this year that boosted deliveries but sent its industry-leading margins to their lowest level in four years.
Sam Abu Al-Samad, an analyst at Guidehouse Insights, said that the exterior design of the updated Model 3 does not look significantly different from the previous design.
He added that “the market believes that this may not be enough” to revive sales in the face of declining demand and rising competition.
Tesla shares were trading up 5.8% at $243.06 by late afternoon, compared with a near-flat broader market (.SPX).
Reduce FSD prices
Tesla has reduced the prices of its premium Model S and Model
By lowering the starting price of the Model
Tesla’s much-touted FSD, technology that has been in the crosshairs of regulators over safety concerns, now costs $12,000, down 20% and well below the $15,000 that Musk said in July would be a low price.
Abu Al-Samid, who expects further cuts, said the FSD price cut was an indication that consumers were “unconvinced”, despite Musk’s argument that a car’s value increases significantly if it is self-driving.
“It’s not close to the point where the driver can adjust it,” Abu Al-Samad said.
First appearance in China
The new Model 3 is Tesla’s first change to its mass-market lineup since it launched the global best-selling Model Y in 2020.
Tesla has not announced a launch date for the new Model 3 in the US as it is currently offering discounts of over $5,000 on some of those in-stock vehicles. The Model 3 is also assembled in Fremont, California.
Tesla plans to debut its latest Model 3 at a trade show in Beijing on Saturday, and some of its new features, including a rear screen for rear-seat passengers, appear to be aimed at Chinese car buyers. It will also showcase the new model at the Munich Motor Show.
Images of the exterior design showed small changes that gave the sedan a sleeker fascia and new headlights.
The new Model 3 also promises a longer driving range of up to 606 kilometers (377 miles) for the standard version based on Chinese testing standards, which is about 9% higher than the base model it replaces in China.
Tesla said it has begun receiving orders in China, where deliveries will begin in the fourth quarter, and in other markets where it exports from Shanghai, including Germany, Japan, Malaysia, Australia and New Zealand.
The new Model 3 should sell well outside China where competition in electric vehicles is less, said Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight.
He added, “But in China, we have already seen the launch of a lot of new models since the Shanghai Auto Show in April with similar and better features and lower prices.”
Reuters first reported last November that Tesla was developing a revamped Model 3 in a project codenamed “Highland.” People involved in the project said it aims to reduce production costs and enhance the model’s appeal.
Tesla didn’t provide any details about the new Model 3’s battery, but a person familiar with the features said it’s the same lithium-iron-phosphate battery from CATL (300750.SZ) for the base model.
The person added that the higher range is a result of reducing weight and improving the appearance of the car so that it faces less wind resistance. Tesla did not respond to a request for comment on the battery.
In China, the Model 3 competes with BYD’s Seal, Geely’s (0175.HK) Zeekr 001, Nio’s (9866.HK) ET5 and Xpeng’s (9868.HK) P7i. Xpeng just announced interest-free loans and free upgrades for that car.
($1 = 7.2582 Chinese yuan, $1 = 0.9211 euros)
(Reporting by Zhang Yan in Beijing, Hyunjoo Jin in San Francisco, Daniel Losinc in Tokyo and Brenda Goh in Shanghai; Reporting by Mohammed for the Arabic Bulletin; Preparing by Mohammed for the Arabic Bulletin) Writing by Kevin Krolicki. Edited by Miral Fahmy, Edwina Gibbs, Kirsten Donovan
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