Tesla has kicked off the year of 2020 with a boom in orders of its China-made Model 3 after the U.S. electric cars (EV) maker slashed the model’s price and started the customer delivery from Tuesday on, local tech media outlet 36Kr reported.
The company announced on January 3 that it would cut the starting price of China-made Model from RMB 355,800 (USD 51,000) to 323,800, an around 9% price drop. And after factoring in China’s subduing subsidies for EVs, the lowest price of a locally produced Model 3 now stands at RMB 299,050, or USD 43,073, which is 15% lower than its original starting price.
Tesla has been seeing enthusiastic feedback from its Chinese customer ever since the price adjustment, with more than 1,000 daily orders of the model, made in its Gigafactory 3 in Shanghai, its first plant outside its home base.
Local Tesla store visits have also surged over the past few days, a Tesla salesperson told 36Kr. It is rumored that the EV subsidies from the government would be discontinued after this March. Customers are rushing to make their purchases before the cancellation, this person added.
Tesla started to build the new Shanghai factory, dubbed Gigafactory 3, in January 2019. As the company’s first plant outside of the US, it is targeting an annual capacity of 500,000 cars. The new facility was built in a record ten months.
Elon Musk, the high-profile founder of the EV maker, made an appearance in Shanghai yesterday to launch the Model Y project that would start producing the Model Y, the company’s fifth car to hit the road, in the Shanghai factory, which is a critical piece to the ambitious automaker.
Tesla has received bountiful support from the Chinese government throughout its China expansion. It is the first and currently the only international car company to be allowed to establish a factory in China without a joint-ownership deal with a local entity, as the government pledged to reduce tariffs and ownership restrictions for foreign carmakers in 2018.
Tesla has also received RMB 10 billion (USD 1.4 billion) loan from a group of Chinese state-owned banks in December, including China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, and Shanghai Pudong Development Bank, with an interest rate lower than the market benchmark.
The first batch of Shanghai-made Model 3 was already handed to Tesla’s employees in December. The EV maker said in a recent statement that the Gigafactory 3 has started producing Model 3 at a run-rate of 3,000 vehicles per week.
36Kr is KrASIA’s parent company.