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Tesla Begins Taking Orders On Its Cheaper China-Built Model 3s (#GotBitcoin?)

Prices for the locally built cars are significantly lower than what a Chinese buyer pays for a Tesla imported from the U.S. Tesla Begins Taking Orders On Its Cheaper China-Built Model 3s (#GotBitcoin?)

Tesla Begins Taking Orders On Its Cheaper China-Built Model 3s (#GotBitcoin?)

Tesla Roadster 2.0.

Tesla Inc. promised to start delivering Model 3 sedans built at its new Shanghai plant within six to 10 months—and priced them well below the imported version—as the electric-vehicle maker races to capitalize on booming Chinese demand.

Offering up details on its China strategy, Tesla said prices for the locally built Model 3 will start from about $47,500 for the Standard Range Plus version. Chinese buyers currently pay $58,900 for a basic Model 3 imported from the U.S.

Initial orders are being taken for the local Model 3 with the first Shanghai-built cars scheduled for delivery late this year or early next year, the company said in a post on its social media account.

Getting China right, industry analysts said, is pivotal for Tesla, whose share price has halved in the past six months amid doubts about its ability to ramp up deliveries in the U.S.

“Tesla has struggled with the Model 3 launch,” said Bill Russo, founder of Shanghai-based consulting firm Automobility. “A repeat of this in China would put their timing at risk and place further stress on their cash flow.”

Tesla broke ground on its Shanghai factory in January. The buildings’ exteriors appear to be nearing completion, judging by recent images posted on Twitter by local Tesla enthusiasts who have been monitoring activity at the site.

At a launch ceremony at the start of the year, Tesla Chief Executive Elon Musk said the plant could start production this year and hit stride in 2020. Friday’s announced delivery dates for the Model 3 suggests the company is on track to meet that timetable.

Sticking to that schedule would enable Tesla to tap into subsidies for electric vehicles before the government cancels them by the end of next year. Under the existing program, a Model 3 manufactured in China would qualify for a subsidy of about $3,600, potentially allowing Tesla to lower its sticker prices.

While the overall Chinese auto industry is experiencing a slump, with annual sales falling last year for the first time since 1990, sales of electric vehicles are surging. The growth includes the premium segment in which Tesla operates.

Tesla already enjoys significant brand cachet in China, and the robust demand for electric vehicles gives the company at good chance of transforming itself from the niche player it is today.

“Tesla is coming into a good segment with a brand that is rooted as a leader in the EV sector,” said Mr. Russo, who said the Silicon Valley company was right to commit fully to China.

In gearing up for local production, Tesla has started a full-throttled recruitment drive. Organizers said an event in eastern Shanghai close to the new factory drew 4,000 applicants on Wednesday. One applicant, who had worked on an assembly line for General Motors Co., voiced confidence in Tesla’s prospects. “I hope to retire at Tesla,” said 28-year-old Zhang Cong.

Tesla ultimately plans to build 500,000 vehicles a year at the Shanghai facility—a massive step-up from the 16,360 imported vehicles it sold in China last year, according to auto-intelligence firm LMC Automotive.

Trade tensions between Washington and Beijing have come into play as Tesla pursues its China plans. Beijing dropped a longstanding requirement that foreign car makers form joint ventures with Chinese partners, a policy that had been criticized by the U.S. But Beijing also raised tariffs on imported cars from the U.S. in retaliation for levies imposed on Chinese goods by Washington.

The new ownership rules and the higher tariffs gave Tesla reason to accelerate plans for a China factory. But in the meantime the tariffs caused it trouble. After raising prices to reflect the new duties, Tesla then slashed prices, drawing a backlash from recent buyers who weren’t offered refunds.

Operating alone means Tesla can retain all the profits from its local operation, rather than sharing them with a joint-venture partner, though it must also shoulder all the political and financial risks associated with the project. Tesla Begins Taking Orders, Tesla Begins Taking Orders,

 

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