Tesla Discontinues Affordable Model 3 Amid Chinese Tariff Impact
Tesla has quietly phased out the Standard Range Rear-Wheel Drive variant of its Model 3 sedan, which was previously the company’s most wallet-friendly option in the United States.
With a price tag of $38,990, this model was removed from Tesla’s website as of Wednesday, as reported by Reuters. This change raises the entry-level price for Tesla’s vehicles to $42,490, with the Model 3 Long Range Rear-Wheel Drive now taking the spot as the least expensive choice.
The discontinued version utilized lithium iron phosphate (LFP) batteries from China, and this decision aligns with the recent implementation of new tariffs in the U.S. The country has enacted a 100% tariff on electric vehicles imported from China, alongside a 25% tariff on EV batteries and essential minerals.
Because of the reliance on components made in China, including the LFP batteries, Tesla’s Standard Range Model 3 no longer qualified for the $7,500 federal tax credit, making it less accessible to potential buyers.
The challenge of affordability remains a significant issue in the EV market, with most electric vehicles, including those from Tesla, costing more than their gasoline-powered equivalents. Tesla has hinted at the possibility of creating a more economical vehicle, but no such model has been introduced to date.
The sunsetting of the Standard Range Model 3 coincided with Tesla exceeding analysts’ delivery expectations slightly, reporting third-quarter sales of 462,890 vehicles.
Competing pressures from Chinese manufacturers are rising, with companies like Xpeng, Nio, and BYD debuting more budget-friendly EV choices. For instance, Xpeng has introduced the new Mona M03, priced at a mere $16,800—less than half the cost of Tesla’s Model 3 in China. Furthermore, Nio and BYD plan to launch a new affordable brand called Onvo to rival Tesla’s Model Y.
In addition, Nio is set to unveil another brand dubbed Firefly, featuring vehicles priced below $30,000. Analysts predict that over 100 new EV models will hit the Chinese market by the end of 2024, fueled by government initiatives promoting affordable electric vehicles.
As of now, Tesla has not provided any statements regarding the discontinuation of the Model 3 Standard Range or its plans for more affordable electric vehicles in the future.
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