Tesla launches updated Model 3 with longer driving range in China

SHANGHAI, Sept 1 (Reuters) – Tesla (TSLA.O) on Friday unveiled a redesigned Model 3 with a longer driving range in China and other export markets for its Shanghai factory including Europe, putting pressure on rivals.

In China, the world’s largest car market and Tesla’s second-largest after the United States, the updated version of the Model 3 came with a starting price 12% higher than the previous model with basic rear-wheel drive.

Meanwhile, Tesla has cut prices in China and the US for its premium Model S and Model

A base price hike on the Model 3, Tesla’s best-selling model after the Y, could help protect margins, but price cuts for its top models highlighted the ongoing pressure electric car makers face, especially in China where Tesla has sparked a price war with its Chinese rivals. Earlier this year.

The updated Model 3 was Tesla’s first change to its mass-market vehicle lineup since it launched the global best-selling Model Y in 2020.

This was also the first time Tesla launched a new model in China, outperforming its home market of the US, and comes as it faces stiff competition on price and features from rivals led by best-selling BYD (002594.SZ).

Tesla has not announced the launch date of the new Model 3 in the US market, as it is currently offering discounts of more than $5,000 on some of those in-stock vehicles. The company also manufactures the Model 3 at its factory in Fremont, California.

First appearance in China

Tesla said it will debut the new 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.

Tesla said the new model for China also features a better audio system, a more comfortable interior, and additional airbags. 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. The standard version has a range of 606 kilometers (377 miles) based on Chinese testing standards. That’s about 9% higher than the base model it replaces in China.

Tesla said it will also display the new model at the Munich Motor Show. German automakers are expected to use this stage to announce a series of new electric cars partly in response to the rapidly transforming Chinese market. These include a new version of Volkswagen’s (VOWG_p.DE) ID.7 and a new CLA electric sedan from Mercedes (MBGn.DE).

“Highland” project

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 (LFP) 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. There was no immediate comment from Tesla regarding 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) P71. Xpeng announced interest-free loans and free upgrades for this model just as the new Tesla debuted.

Tesla’s sales in China increased nearly 49% in the first half, compared to a lower base in 2022 when coronavirus lockdowns disrupted production and sales. Model Y sales were more than double those of the Model 3 in that period.

Tesla said it has begun taking orders for the new Model 3 and deliveries will begin in China in the fourth quarter. It has also begun taking reservations for the new car in other markets from which it originates from Shanghai, including the Middle East, Japan and Australia.

In China, the price of the new Model 3 starts at 259,900 yuan ($35,807).

($1 = 7.2582 Chinese yuan)

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