Tesla China Model 3 Sales Are Through the Roof After Price Reduction

According to Reuters, Tesla China has reported an 8 percent price cut on the Model 3. The starting price for the Model 3 in China, effective immediately, is 249,900 yuan ($36,805). The price was 271,550 yesterday ($39,900). Prices for the Model 3 long-range rear wheel drive were also reduced from 344,055 yuan ($50,668) to 309,900 yuan ($45,639) by almost 10 percent.

According to Zeng Yuqun, CEO of CATL, which may or may not be supplying the batteries for the Chinese Model 3, LFP (lithium iron phosphate) batteries cost around 10 percent less than the NMC (nickel manganese cobalt) that have been the mainstay of Model 3 cars to date. The lower cost is mainly due to the use of iron and phosphate, which compared to nickel and cobalt, is abundant and cheap. No nickel and no cobalt means no nickel and cobalt mining, a method that has big environmental and social justice concerns connected with it.

There are much lower energy densities for LFP batteries than for NMC batteries, but they are also less vulnerable to thermal runaway events that can lead to fires or explosions. That means that when built in vehicles, they require less complicated and expensive cooling systems, another aspect that drives down prices. They are also capable of more charging cycles, which extends their service life, than the NMC batteries. Today, when Elon Musk and Zeng Yuqun speak of “million mile batteries,” they’re talking about LFP batteries.

The switch in battery chemistry has apparently had no adverse effect on range, however. The range is now 468 kilometers, according to Tesla, up from the 445 kilometers previously mentioned. All range numbers still use the obsolete NEDC standard for cars sold in China.

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