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Tesla promotes cheaper China-made Model 3 in sales push

BEIJING/SHANGHAI (Reuters) – the U.S. electric vehicle (EV) maker Tesla Inc said on Friday it would price its China-made Model 3 vehicles of 328,000 yuan ($47,529), 13% are cheaper than import at the moment as it pushes sales in the fast-growing market.

FILE PHOTO: The Tesla Model 3 is displayed during a media preview of the Auto China 2018 motor show in Beijing, China, April 25, 2018. REUTERS/Damir Sagolj

The carmaker is building a plant in China since January, where the first output will be the Model 3 cars. Pre-orders for the cars will also start on Friday, the company said on its website.

The “standard range plus Model 3” is 49,000 yuan cheaper than China’s current cheapest version, the standard range plus, although it remains unclear whether the automaker will be eligible for China’s subsidies for new energy vehicles.

The prices for five different versions of China-made Model 3s range of 328,000 to 522,000 yuan. Customers can expect the car in 6-10 months, the company said in a press release.

He also said that buyers only need to pay a deposit of 20,000 yuan and the financing options meant that the monthly payments will be the start of the 1,100 yuan.

“The price drop is to make Tesla more accessible,” he said.

The high-end version of the Model 3 will still be imported from the United States.

Investors are focused on the question whether the gross profit margin on the Model 3 remains around 20% in China.

CRUCIAL PRODUCTION

Doubts about the Model 3 production and sales performance to hit Tesla’s stock in recent months.

The production of cars locally is likely to help Tesla minimise the impact of the Sino-AMERICAN tit-for-tat import duties, which has forced the EV maker to adjust prices of the AMERICAN cars in China.

Keeping the prices in check will also help Tesla to fend off competition from a part of the domestic EV startups such as Nio Inc, Weltmeister and XPeng Engines, as well as established car manufacturers such as Volkswagen and General Motors Co.

Tesla’s so-called Gigafactory is China’s first wholly foreign-owned car plant, and is seen as a reflection of the country’s wider shift to open up the car market.

Photos of the Shanghai plant is placed on Tesla’s social-media account showed the construction of the main section was almost done. The company also held a recruitment event this week for the car industry and logistics employees.

Tesla forecast its deliveries in 2019 would reach 360,000 to 400,000 vehicles and said that it can produce as many as 500,000 vehicles as the factory of China, achieved the volume of production in the fourth quarter.

Reporting Yilei Sun in Beijing and Brenda Goh in Shanghai; Editing by Stephen Coates Cushing and Christopher

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