Elon Musk confirmed in an earnings call Wednesday that Tesla will cut the price of the Model 3 in China to meet the government’s new eligibility for subsidies. According to Tesla’s official account on Chinese social media, the reduction will go into effect May 1.
Tesla’s move comes as the Chinese government issued new regulations that require electric vehicles to be priced below 300,000 yuan to qualify for subsidies on April 23.
The base price of the standard range Model 3 made in China is 323,800 yuan. While Musk didn’t provide a specific figure, it is estimated that consumers can bring a Model 3 home at around 270,000 yuan with about 20,000 yuan in subsidies after Tesla lowers its price under 300,000, which will pose a potential threat to other automakers in China’s market.
Tesla’s newly released report shows that the company made $5.985 billion in revenue in Q1 2020, rising 32% year on year despite the global economic chill. It also sold 76,200 Model 3 and Model Y units this quarter, a new record for the company.
In April, Tesla showcased the capacity of its Giga Shanghai factory with footage of robots working on the production line. The production rate for the Made-In-China (MIC) Model 3 has now exceeded 3,000 units per week at the factory, with Tesla aiming for 4,000 units per week.
Tesla Chief Financial Officer Zachary Kirkhorn said the cost of vehicles produced at its Shanghai factory in Q1 is already lower than the cost of the Model 3 made in the United States.