Tesla Makes Model 3 and Model Y Up to 42.7% Cheaper in China Than They Are in the U.S.

Tesla Model Y is cheaper in China than the cheapest Model 3 in the U.S. 11 photos
Photo: Tesla
Tesla's Discount Promo Offer in ChinaTesla's Discount Promo Offer in ChinaProud Tesla Owner from Panziga, the place Now Known as Tesla VillageModel Ys in Panziga, the place Now Known as Tesla VillageModel Y in Panziga, the place Now Known as Tesla VillagePanziga, the place Now Known as Tesla VillageKid playing with Tesla's UIModel Y under the night sky in ChinaTesla on the road to Panziga, the place Now Known as Tesla VillageTesla on the road to Panziga, the place Now Known as Tesla Village
Tesla is clearly facing a demand problem in its two major markets: the U.S. and China. Disappointing sales numbers in Q4 2022 and also in December alone led to something Tesla denied it would do again in China: reduce prices. It had already done that twice to increase sales, but it did not work. Now, a Model Y can be up to 42.7% more affordable than it is for the American customers.
It is true that Tesla sells a rear-wheel-drive version of the Model Y in China and has no such option in the U.S. Despite that, the entry-level Model Y costs RMB259,900, equivalent to $37,765 at the current exchange rate. The cheapest Model Y Americans can buy is the Dual Motor All-Wheel-Drive, which starts at $65,990 in the U.S. The $28,225 difference represents 42.7% of the American price tag for this EV. If we use the Chinese vehicle as a reference, that’s 74.7% more than Chinese customers buy for the most affordable Model Y available in their country.

We can also compare the Model Y single motor rear-wheel-drive to the Model 3 that Tesla sells in the U.S. with the same spec for $46,990. In that case, the Chinese Model Y is 19.6% cheaper than the American Model 3. If you invert the comparison, the electric sedan sold in the U.S. is 24.4% more expensive than the Chinese electric SUV.

Anyway, we’d better compare the entry-level Model Y sold to American customers to its true equivalent in China. The Model Y Dual Motor All-Wheel-Drive costs RMB309,900 ($45,031) in China, which is also cheaper than the most affordable Model 3 customers can buy from Tesla in the U.S. The price difference from the same spec in the U.S. is $20,959, which represents 46.5% of the price of the Chinese vehicle and 31.8% of the American price tag for this EV.

Tesla reduced prices in China in the past in an attempt to make its vehicles fit the government incentive for EVs. They had to cost less than RMB300,000, but the financial aid is no longer valid. Despite that, electric cars in China still can get free or cheaper license plates in crowded megalopolises such as Shanghai. Tesla is probably trying to convince these customers to choose its vehicles instead of those from the competition.

It will not be easy. Tesla only has four vehicles in its lineup, and they are already considered old. The most recent EV from the brand – the Model Y – should receive a midcycle refresh in 2023. Yet, the vehicle that the company confirmed it would try to renew is the Model 3.

In December, Tesla sold 55,796 EVs in China. BYD sold 111,939 units, more than the American EV maker managed to deliver in November in China: 100,291 units. BYD has recently increased prices for its EVs.

Compared to what Tesla sold in December 2021, that result is still a setback: the EV maker sold 70,847 vehicles one year ago.

For a company that would present 50% better results yearly, regardless of what it achieved before, that’s concerning. Unfortunately for Tesla, reducing prices does not seem enough to revert the demand drop.
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About the author: Gustavo Henrique Ruffo
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Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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