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Tesla: Model 3 prices are going to be cheaper in China?

Tesla has been one of the top-selling cars, a few years in a row. Elon Musk (the CEO of Tesla) is always developing new ideas about the new models which take customer’s interest, then their money. Tesla has multiple Gigafactories including one in Shanghai, China.

On Wednesday Bloomberg reports, Tesla announced to take a step back in price in China. It’s going to get lowered by 20% on its Model 3 sedans from the second half of 2020. The current price is $50,547.67 (355,800 yuan). This price drop will bring more buyers in the world’s largest electric vehicle market.

Tesla’s battery is among the most expensive component in vehicle production. Analysts believe that Tesla will reduce the price much lower by using the locally made components in its Model 3, including the cost-heavy batteries. Changing the battery partners from the long-term partnership with Panasonic Corp. to South Korea’s LG Chem, Tesla looks to smooth its supply chain and find cost efficiencies.

“Tesla aims to bring down costs by using more local components, allowing it to import fewer parts and avoid tariffs, the people said, asking not to be identified as the matter isn’t public. Prices of the cars, which will be built in Tesla’s new Shanghai factory and start at 355,800 yuan ($50,800), will probably be lowered from the second half of 2020, they said”, says Bloomberg.

When Reuters contacted Tesla, they declined to answer.

Tesla is taking a look at locally-produced batteries from China’s Contemporary Amerex Technology and will use them in the same time-frame as (Made-in-China) Model 3 price cuts, as earlier reports indicate. It’s not clear that how many Model 3 will Tesla manufactures in China.
We may not be going to see remarkably cheaper Tesla vehicles soon (in China) until the battery partnership deal (with LG Chem) comes to fulfillment.

This lower price Model 3 will give a huge advantage to Tesla over local manufacturers but may also help the less electric vehicle trend in China to rise. As in November, the sales of new-energy vehicles in China dropped by 43.7% or you can say about 95,000.

Well, it was unexpected of Tesla would build a Gigafactory in China, along with an entirely new Chinese supply chain, and start producing Model 3 sedans under a year. Based on Tesla’s own comment in October, they are going to do at least “body, paint, and general assembly,” which is already a big deal.

Do you guys feel like this new cheaper version of Model 3 will be proven worthwhile? If not then why? Please share your beliefs in the given section below.

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