Tesla working towards a 10% price slash for Model 3 in the Chinese market

1st October 2020

The Tesla Model 3 is the electric car company's biggest seller in China, because according to state-backed China Automotive Information Net, since the vehicle's debut in January, almost 70 000 vehicles have been sold, averaging a price tag of 271 550 yuan (R663 530).

The company's recent move to get new batteries from a Chinese supplier, however, will cut the price down by 10% to 249 900 yuan (R610 628) after government subsidies.

The new power supply will include a cobalt-free lithium iron phosphate battery made by Ningde, Dujiam-based Contemporary Amperex Technology Co. Ltd.

The batteries use a cheaper combination of raw materials and, will help Tesla better compete with domestic and international rivals that have begun to pop up in the Chinese market with new models.

Tesla's Shanghai plant currently uses nickel-cobalt batteries made by Japan's Panasonic Corp. and South Korea's LC Chem Ltd.

Cobalt is expensive to use because nearly 50% of the world's supply comes from the Democratic Republic of Congo, whereby long-standing corruption, governance issues, and allegations of the use of child labor in mining have placed high taxes on the metal.

CATL will also be supplying different types of batteries to several other global automakers including, Daimler AG, Hyundai Motor Co., Toyota Motor Corp., and Volkswagen AG.

Chief Executive Officer Elon Musk assured that Iron batteries will "still be good" for Tesla's mid-range products though, he added that Tesla doesn't want to be constrained by limited production capacity for nickel-cobalt batteries.

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