A few days ago we echoed the news that Tesla had decided to lower the price of the Model 3 Standard Range Plus RWD produced in China, the largest market for electric cars in the world. They just did this with the aim that the vehicle could continue to benefit from subsidies states (the new aid plan contemplated a lower price limit than the previous plan, which excluded Tesla’s cheapest model from the program).
The imposition of a lower limit was due to China’s decision to announce a reduction of aid to the purchase of electric cars by 10% for this year. This cut will increase to 20% in 2021, and 30% in 2022 since the objective of the government of the Asian country is that the subsidies are progressively replaced by minimum sales quotas for electric cars that are mandatory for all manufacturers.
China’s goal is for “new energy vehicles” (battery-powered, hydrogen fuel cell, and plug-in hybrids) to move from their current market share of 5% to an ambitious 20% by 2025.
The Tesla Model 3 Standard Range Plus is now priced at under $38,000 a change, a very attractive figure for a premium D-segment sedan, regardless of whether it’s electric or not. This has caused a brutal increase in demand, with an average of 1,000 orders a day so far this month. A figure that the Giga Shanghai factory will be unable to cover with its current production rate of 3,000 units per week.
Tesla originally had the objective of manufacturing some 150,000 units per year in the Asian factory. This figure will increase in the short term to 250,000 units once the recently introduced Model Y SUV is added to the production lines. However, the exceptionally high demand for the Model 3 could force Tesla to expand the plant’s production capacity ahead of schedule.