Tesla has lowered the price of its new long-range Model 3 by nearly 4% in China just ahead of the car’s delivery date.

The updated Model 3, made in Shanghai and offering an 830km driving range, now starts at 259,500 yuan (US$36,400), which is 10,000 yuan (US$1,402) less than previously announced.

Deliveries are set to begin this month.

Tesla is also offering buyers in China an 8,000 yuan (US$1,122) insurance subsidy and a five-year interest-free loan, saving customers up to 20,000 yuan.

The company’s share of the mainland EV market dropped to 3.2% in June, down from 16% in 2020, according to the China Passenger Car Association.

Tesla said it regularly adjusts local vehicle prices based on production costs.

A new six-seat Model Y variant, also made in Shanghai, is expected to begin deliveries this month.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ China’s EV price war is squeezing profits across the entire industry

Tesla’s price cut reflects broader market pressures that are hurting even the strongest players in China’s EV market.

BYD, China’s leading EV manufacturer, reported a 30% drop in second-quarter profits despite strong sales, specifically citing “increased price competition” as a major factor2.

The company’s experience demonstrates how the price war has become so intense that even market leaders with economies of scale struggle to maintain margins.

Industry-wide, average car prices in China have fallen 19% over the past two years, with EVs now costing less than gasoline cars on average—a complete reversal from five years ago when gas cars were 10% cheaper3.

This shift means Tesla’s 4% price reduction is actually a relatively modest response to market conditions that have forced much steeper cuts across the industry.

2️⃣ Chinese EV brands are rapidly displacing Tesla’s market dominance

Recent Tesla developments