Tesla introduced the updated Model 3

Tesla introduced the updated Model 3

EV giant Tesla Inc  on Tuesday started delivering the upgraded Model 3 Performance in China, months after introducing other variants of the upgraded vehicle in the country.

What Happened: The Performance variant is the most premium and powerful version of the mass-market sedan starting at 335,900 yuan ($46,294). In comparison, the cheapest rear-wheel drive variant starts at just 231,900 yuan ($31,961).

The company announced the start of deliveries with a post on social media on Monday.

Tesla introduced the upgraded Model 3 first in China in the second half of 2023. It was introduced in the U.S. months later in January. However, at the time of introduction, the company’s websites for both countries listed only a rear-wheel drive version and another long-range version. The Performance variant was then mysteriously absent.

Tesla subsequently introduced the Performance variant in the U.S. in April. The high-end variant of the Model 3 is now priced at $54,990 in the U.S., well above its Model Y counterpart.

Why It Matters: The new variant of the cheapest offering from Tesla comes amidst the EV maker’s attempts to boost sales.

For the first quarter, Tesla reported an 8.5% year-on-year decline in deliveries with 386,810 vehicles delivered across the world, marking the first time the company has seen a decline in quarterly delivery numbers since the second quarter of 2020 when the Covid-19 pandemic halted production.

Among the reasons listed by the company for the drop in sales was the production ramp of the upgraded Model 3 at its Fremont factory in California.

In April, Tesla researcher Troy Teslike predicted lowered demand for the Model 3 to be the biggest challenge for Tesla in terms of deliveries in the second quarter. Teslike noted that despite being the cheapest offering from Tesla, the entry-level variant of the Model 3 does not qualify for a federal tax credit of $7,500, unlike Tesla’s best-selling Model Y SUV. This means that the Model Y starts at a lower price point for eligible customers after tax credit than even the Model 3.

Model 3 and Y make up the majority of Tesla’s sales, thanks to their lower price point as opposed to the remaining of Tesla’s lineup. In the last quarter, the two vehicles accounted for 95.6% of the company’s total deliveries.

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