Tesla Inc. unveiled the first refresh of its popular Model 3 sedan with a sleeker look and longer range, and slashed the price of its premium cars in the US and China in an all-out push by Chief Executive Officer Elon Musk to boost sales.
(Bloomberg) — Tesla Inc. unveiled the first refresh of its popular Model 3 sedan with a sleeker look and longer range, and slashed the price of its premium cars in the US and China in an all-out push by Chief Executive Officer Elon Musk to boost sales.
The new iteration of the four-door sedan comes with a slimmer, sportier look, and a single-charge range of 606 kilometers (377 miles). Two new colors — Stealth Grey and Ultra Red — have been added, while inside, there’s a 17-speaker sound system, customizable ambient lighting and an 8-inch touchscreen for rear-seat passengers. The standard rear-wheel drive version accelerates from 0 to 100km/h in 6.1 seconds.
Just hours after the long-anticipated unveiling, Tesla rolled out steep price cuts of its Model S and X cars in China and the US, and reduced the price of its full self-driving feature by $3,000 to $12,000.
The cuts follow further reductions last month, and several rounds of discounting that already have taken a toll on the company’s automotive gross profit margin, which fell to a four-year low in the second quarter.
Read More: Tesla Price Cuts Continue Even as Interest Rate Pressure Relents
While the revamped Model 3 comes with a heftier-than-expected 259,900 yuan ($35,800) price tag in China — 12% more than the older version — a refresh was needed to keep up with domestic rivals like BYD Co. — which aims to sell 3 million vehicles this year — and Nio Inc. and Xpeng Inc., which are expanding their lineups with cars tailored to local tastes.
Read More: Elon Musk Expects Tesla’s Main Rival Will Be a Chinese EV Maker
“Tesla has discovered that to win in China’s hyper-competitive EV market, you must race faster than anywhere else in the world,” said Bill Russo, a former Chrysler executive who’s now chief executive officer of Automobility Ltd., a Shanghai-based consultancy.
Selling a model that hasn’t been updated in six years in such a market is the automotive equivalent of buying an older iPhone, he said, adding it will be “very challenging” to sustain a higher price point for the new version and still sell significant volumes.
“If you’re not the latest and greatest, you are left with price discounts as your only weapon,” he said.
What Bloomberg Intelligence says:
“Tesla’s higher-than-expected price for its redesigned China-built Model 3 could ease concerns that BYD, Xpeng, Nio and other rivals might need to cut prices further to sustain their order and sales momentum.” — Joanna Chen, Steve Man
Deliveries from Tesla’s Shanghai factory fell to the lowest level this year in July. Tesla has since cut prices further, fueling concerns of a renewed front in a bruising price war that has eroded profit margins.
Read More: Tesla Started a China Price War That May Destroy Some Carmakers
Local rivals including Xpeng and Geely Automobile Holding Ltd.’s Zeekr EV brand have also aggressively marked down prices and launched new products to compete directly against Tesla, while Nio has pledged to launch the first product of its new mass market brand as soon as 2024.
Musk first unveiled the Model 3 to enormous fanfare in March 2016, but famously faced several months of “production hell” as the company struggled to ramp up production in 2018.
The new model is live on all order sites in China, Europe, the Middle East and Australia, though not in the US.
–With assistance from Sean O’Kane, Dana Hull and Danny Lee.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.