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Previously, the starting price for Model 3 sedans produced at Tesla’s Shanghai factory with a standard driving range was 271,550 yuan. Now, it will cost 249,900 yuan (or $36,805).
Shares of electric vehicle producer Tesla Inc (NASDAQ: TSLA) soared on Wednesday. Tesla stock closed 2.37% up, slightly rose after hours, and are further 2.92% up in early trade today, $441.55 per share as of press moment. Tesla’s market cap has totaled $390.49 billion. The jump followed the announcement about Tesla cutting the price of its Model 3 sedans made in China.
Notably, Wednesday became a positive day for the whole market, with stock market indices going up. Nasdaq Composite Index rose by 0.74% to 11,167.51. S&P 500 closed 0.83% up at 3,363.00. Further, the Dow Jones Industrial Average added 1.20% to 27,781.70.
Tesla rivals have demonstrated good performance as well. For example, shares of Ford Motor Co (NASDAQ: F) gained 0.91% to $6.66. General Motors Co (NASDAQ: GM) stock rose by 2.96% to $29.59, and NIO Inc. ADR stock jumped by 1.77% to $21.22.
Tesla Cut Chinese-made Model 3 Price
Preparing for the sales of the standard range Model 3 sedans, Tesla announced its price lowering by about 8%. Previously, the starting price for Model 3 sedans produced at Tesla’s Shanghai factory with a standard driving range was 271,550 yuan. Now, it will cost 249,900 yuan (or $36,805).
Besides, the standard range Model 3 sedans will now come with cheaper lithium iron phosphate (LFP) batteries instead of the nickel-cobalt-manganese (NMC) cells Tesla used previously. The LFP battery will be provided by Chinese Amperex Technology Limited (CATL).
As for Model 3 vehicles with a longer range, their price is now 309,900 yuan compared with the 344,050 yuan Tesla set before.
Tesla started the delivery of its cars from the Shanghai factory in December, which helped it save on shipping costs and tariffs for imported models. In August this year, Tesla sold over 11,000 vehicles, mostly Model 3s, in China.
Tesla’s Production Plans
Despite the pandemic, Tesla has demonstrated tremendous growth and is further expanding its operations. Currently, it is building a new car manufacturing capacity for Model Y sports-utility vehicles in Shanghai, with deliveries expected to start next year.
In addition, Tesla CEO Elon Musk believes that the company has the potential to increase production to at least 20 million cars a year before 2030. As we have reported, the figure is 50 times more than the 365,000 vehicles Tesla made last year and 50% more than the 367,500 vehicles it sold last year.
Elon Musk also believes Tesla will be much more valuable in years to come despite short term challenges. According to Musk, the current gains in Tesla shares will be a ‘mere shadow’ of what the gains will look like in five years.