Tesla launches pricier new Model 3, adds discounts for premium cars in US, China
TESLA on Friday (Sep 1) unveiled a restyled Model 3 with a longer driving range in China and other markets, including Europe, the Middle East, Australia and Japan, putting pressure on rivals that are expected to announce new electric vehicles (EV) in the next few days.
In China, the world’s largest auto market, the refreshed version of the Model 3 comes with a starting price 12 per cent higher than the previous, base rear-wheel drive model, reversing a trend towards price cuts that had sparked a price war between Tesla and its Chinese EV rivals.
But Tesla also slashed the price of its premium cars in the US and China, in an all-out push by chief executive officer Elon Musk to boost sales.
The updated version of the Model 3 is Tesla’s first new or restyled car since it launched its global bestseller, the Model Y, in 2020. Tesla plans to start production of its Cybertruck later this year.
The rollout of the Model 3 in China – and the markets to which Tesla exports from its manufacturing hub there – suggests its Shanghai plant would be the first to make the model. Tesla also makes the Model 3 at its plant in Fremont, California.
The new Model 3 promises a longer driving range for China, according to the company’s website. The standard version has a rated range of 606 km, based on China’s testing standards. That is about 9 per cent higher than the base model it replaces in China.
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Tesla said it has started taking orders and will begin deliveries in China in the fourth quarter. In Australia, deliveries are set for January.
The company sold 64,285 China-made EVs in July, down 31 per cent from a month earlier, the most recent data from the China Passenger Car Association (CPCA) showed.
In a statement issued by its China operations, Tesla said the new model features a better acoustic system, an improved and more comfortable interior, and a display screen for back-seat passengers. Images of the exterior showed small changes that give the sedan a sleeker front and new headlights.
The Tesla announcement came days before the Munich auto show, where German automakers are expected to announce a run of new EVs. These include a new version of the Volkswagen ID.7 and a new electric CLA model sedan from Mercedes.
Reuters first reported last November that Tesla was developing a revamped version of the Model 3 in a project codenamed “Highland”. People involved in the project said it was aimed at cutting production costs and boosting the appeal of the model.
In China, the new Model 3 starts at 259,900 yuan (S$49,072), the company’s website showed on Friday.
Musk first unveiled the Model 3 to enormous fanfare in March 2016, but famously faced several months of “production hell” as the company struggled to ramp up production in 2018.
“Tesla has discovered that to win in China’s hyper-competitive EV market, you must race faster than anywhere else in the world,” said Bill Russo, a former Chrysler executive who is now chief executive officer of Automobility, a Shanghai-based consultancy.
Selling a model that has not been updated in six years in such a market is the automotive equivalent of buying an older iPhone, he said, adding it will be “very challenging” to sustain a higher price point for the new version and still sell significant volumes.
Just hours after the long-anticipated unveiling, Tesla rolled out steep price cuts of its Model S and X cars in China and the US, and reduced the price of its full-self driving feature by US$3,000 to US$12,000.
The cuts follow further reductions last month, and several rounds of discounting that already have taken a toll on the company’s automotive gross profit margin, which fell to a four-year low in the second quarter.
Local rivals including Xpeng and Geely Automobile Holding’s Zeekr EV brand have also aggressively marked down prices and launched new products to compete directly against Tesla, while Nio has pledged to launch the first product of its new mass market brand as soon as 2024.
“If you’re not the latest and greatest, you are left with price discounts as your only weapon,” said Russo.
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