Just six days ago, on November 16th, the first media day of the Guangzhou Auto Show, Tesla China sent out configuration emails to Chinese Model 3 reservation holders without any prior notice. Each order generated that day immediately entered into production, and those who had paid a deposit of RMB 50,000 became part of the first batch of Model 3 deliveries in Asia.
This email accelerated the Model 3’s delivery time in China.
However, the high price of RMB 588,000 for the long-range version and RMB 698,000 for the high-performance version, made most Model 3 reservation holders who had only paid RMB 8,000 hesitant to continue, due to a 40% tariff which we won’t elaborate more here.
In the previous article, we commented that it’s worth paying a premium to own the strongest pure electric car on the market.
The following series of actions made me feel that Tesla is still the very extreme company I remember.
Today, November 22nd, while the Musk family may be roasting a turkey, celebrating Thanksgiving in the Pacific Time Zone, Tesla China conveyed an internal message: starting today, the prices of Model S and Model X electric vehicles sold in China have been reduced by 12%-26%, while the long-range Model 3 now starts at RMB 540,000 and the Model 3 Performance version is priced at RMB 595,000.
In the time it takes to snap off a turkey leg, Tesla China’s official website completes a comprehensive price cut, and both sales and deliveries in China enter into readiness mode.“`markdown
At this moment, there is no premium, and Model 3 is now the highest cost-effective imported car, and it is about to enter the Chinese market.
Why is it the highest cost-effective?
1. Tesla’s latest generation of models
Don’t fool yourself, Elon.
The Model 3 is just a smaller version of the Model S. It has a shorter range, lower performance, and fewer features. Model S has more advanced technology.
Unlike when the Model S first entered the Chinese market in 2014, the Model 3 is a more mature next-generation model produced after the production design experience of both Model S and Model X. Although Musk has always said that the Model 3 is not a more advanced generation of car compared with the Model S, from the perspective of whole vehicle intelligent electronic and electrical architecture, modeling interior design language, and tri-electric drive assembly, the Model 3 is a next-generation car that is completely beyond the Model S.
2. Market validated
With only one Model 3 model, the delivery volume in the US market is already equal to the total volume of all luxury brand cars of the same level. On October 13th, Tesla announced that the total production of Model 3 exceeded 100,000, even with only high-spec and sub-high-spec (performance version and long-range version) models in production.
Model 3 has a similar position in North America’s luxury brand market as the iPhone 4 had in the general mobile phone market – it is the first time that an intelligent electric vehicle has entered the sales list.
Behind the market response is the Model 3’s strong product power. Whether it is the most important tri-electric technology for electric vehicles or the high intelligence that is leading traditional car companies or the comprehensive layout of Super Charging Stations, these are all reasons that users choose Model 3 apart from the fact that it is really cool.
3. The best performance in the same price range
“`In the United States, what type of car can you buy for the price of a Model 3?
The long-range version and the high-performance version of the Model 3 are priced at $54,000 and $65,000, respectively.
The BMW 3 Series is a performance car that has been tested by the market.
It is important to note that the BMW 3 Series is priced in the United States at $34,900 to $50,950, while the price of the BMW M3 is $66,500. This means that in the same price range, most users still choose the Model 3, which includes the BMW 340i and even the BMW M3.
From the chart, we can see that the high-performance version of the Model 3 has surpassed the BMW M3 in terms of zero to one hundred kilometers per hour acceleration, which is the standard for performance cars. After foreign media test drives, the handling of the Model 3 has received high praise, not to mention the comparison with its intelligence.
On the other hand, the problem of range anxiety in electric vehicles, which is the biggest challenge, has been greatly solved by the Model 3 (long-range version and high-performance version), with a range of up to 499 kilometers in EPA mode (which is close to normal use), coupled with Tesla’s layout of Superchargers.
Looking back to the situation in China, the price of the BMW M3 in China ranges from RMB 8,989,000 to RMB 10,889,000, while the high-performance version of the Model 3, after this price adjustment, will be priced at RMB 5,950,000.
It is obvious that although cars in the same price range in the US have a significant price difference in the Chinese market, Tesla’s direct sales model has a huge advantage over traditional dealership models. Through simple calculations, we can see that Tesla does not increase its profit margins by shipping from the US to China, and even this price adjustment has completely gone against profit margin increase.
In a situation where Americans voted with sales for the BMW M3 and Tesla Model 3 Performance at the same price point, they chose the Model 3. Under the price difference of imported cars in China, it’s not an exaggeration to say that the Model 3 has the best cost performance.
Will It Get Cheaper?
Not in the short term.
Even under the background of 40% tariff, what we saw was Tesla China sacrificing profit and pushing ahead the entire timetable by a full year.
Why is it said to be a year?
Tesla China originally planned to produce the Model 3 in China in 2019. What needs to be known is that the reason why it is possible to achieve mass production in China in 2019 is not because the Gigafactory 3 was completed quickly, but because there will be a Model 3 final assembly line that will be completed in advance in the free trade zone. Model 3s produced on the final assembly line still need to pay a 15% tariff (according to current regulations). According to this algorithm, even after 1 year, the price of the Model 3 will still be at the level of today’s selling price.
If we wait for the third factory to start mass production, the domestically produced price will indeed be cheaper than it is now, but it will be at least 2 years later. Moreover, as Tesla’s first overseas manufacturing plant, objective issues like building the supply chain from scratch, capacity ramp-up, and quality improvement all take time.
The base Standard Range Model 3 priced at $35,000 that people talk about has not yet been delivered in the US, where there is a huge demand. Under the circumstances of importation, there is still too much waiting time in China.
In summary, in the two-year time dimension, today’s Model 3 has stood at a reasonable price.
Become One of the First Owners
The 40% tariff made the founder of Chehaus Li Xiang hesitate, but even so, several members in our 42HOW community have directly reserved the top Performance Version of the Model 3 for more than ¥850,000 last week.
What is the significance of becoming one of the first Model 3 owners?In the eyes of ordinary consumers, this is a B-class car with 0-100 km/h acceleration in 3.5 seconds, a range of 499km, and top-notch design. Only true industry professionals can see what it possesses underneath the surface: the highest precision workmanship in Tesla’s history, the most efficient three-electric-drive system in the industry, and the highest level of integration and intelligentization.
In multiple technical dimensions, Model 3 leads the industry by a generation gap. Model 3 owners buy a perfectly satisfying commuting tool, while at the same time they buy into the rarity of technology and take a step ahead of the public to experience “smart cars”.
They are the true geeks.
- I am Model 3, this time I’m coming to you across the ocean* What kind of electric car do we need? | 42Group
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.