Tesla Inc. has unveiled a revamped version of its Model 3 sedan, introducing sleeker looks and longer range, while also slashing prices on its premium vehicles. This move is part of the automaker's efforts to boost sales and maintain its competitive edge in the market.
The new Model 3 features a redesigned front end, marking the first major facelift since the vehicle's production began six years ago. In addition, the car now boasts an extended range, with a rating of 606 kilometers (377 miles) on a single charge in China, representing a 9% improvement. Other upgrades include an enhanced 8-inch rear touch screen and additional speakers in the sound system.
In a strategic move, Tesla swiftly followed the model's unveiling with significant price reductions on its Model S sedan and Model X sport utility vehicle in the United States and China. The base price for the Model S is now $74,990, while the Model X starts at $79,990. This is a substantial reduction compared to the starting prices of $104,990 and $120,990, respectively, at the beginning of the year.
By lowering the base price of the Model X below $80,000, Tesla has made the SUV eligible for the federal tax credit of $7,500, which has been revived by the Inflation Reduction Act.
To further attract customers, Tesla also reduced the price of its Full Self-Driving driver-assistance system by $3,000, bringing it down to $12,000.
However, even with these updates and price cuts, the new Model 3 comes with a higher-than-expected price tag of 259,900 yuan ($35,800) in China, representing a 12% increase compared to the older version. This might prove challenging for Tesla as it faces tough competition from domestic rivals like BYD Co., Nio Inc., and Xpeng Inc., who are rapidly expanding their electric vehicle lineups.
Industry experts suggest that in order to succeed in China's highly competitive EV market, Tesla needs to constantly innovate and stay ahead of the competition. Selling a model that has not been updated in six years could make it difficult to sustain higher pricing while achieving significant volume sales.
Tesla's deliveries from its Shanghai plant dropped to a yearly low in July, sparking a price war in China as the company faced challenges with factory upgrades and sought to maintain its market position. In response, Tesla's local competitors have resorted to price markdowns and launching new models to directly compete with the American automaker.
Despite the challenges, Tesla remains confident about the revamped Model 3's potential in the global market. The updated model is now available for order in China, Europe, the Middle East, and Australia, and is expected to be introduced to the US market soon.