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Tesla Cuts Price Of China-made Model 3; Next Delivery Next Week

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Tesla Inc. cut the starting price for its China-made Model 3 sedans mainly with Chinese government's incentives for electric vehicles, as the second round of delivery is scheduled on January 7. With the move, the company aims to boost its sales in the world's largest market for automobiles, especially electric vehicles.

The US electric vehicle maker now offers the standard version of Model 3 at 323,800 Chinese yuan or $46,500, lower than initial price of 355,800 yuan, Tesla's website shows. Including the subsidies from the Chinese government for electric vehicles, prices start from 299,050 yuan or $42,919.

The company is also reducing the prices of optional extras including body color and high-performance wheels, and home charging facilities.

Tesla's cars built in China Gigafactory 3 was recently added to a list of vehicles qualifying for an exemption from a 10 percent purchase tax in the country.

Tesla also said that 30 percent of its China supply chain was localized, and that it expects to completely localize its supply chain in Shanghai by the end of the year. The planned localization is expected to help the company to cut price more in the year.

At the China Gigafactory, Tesla's first plant outside the United States, the company is currently producing 1,000 vehicles a week and plans to increase this rate to around 3,000 cars next year. The company estimates that the production line at the Chinese factory will have a capacity of 150,000 units annually. Earlier, Tesla had also said that China-made cars will be a simplified, more cost-effective version of Model 3s produced at its California factory.

The company had delivered its first set of cars built in China to 15 of its employees on December 30. It achieved the milestone of first deliveries in just one year after the construction of the Gigafactory started in January 2019, while production commenced in October.

Tesla believes China could become the biggest market for Model 3.

Countries around the world are providing incentives for electric vehicles as a way to curb the threat of global warming as major automakers are bringing out new electric vehicles each day.

In the Netherlands, Tesla in December delivered more than 12,000 Model 3 vehicles, benefited by an electric vehicle incentive that expired at the end of 2019.

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