Tesla China cuts prices across entire lineup making entry-level Model Y eligible for incentive

After rumours over the weekend that Tesla was going to make a big announcement in China, the automaker did just that by cutting prices on their entire Model 3 and Model Y lineup on Monday morning.

With the price cuts, which is a first in 2022 for Tesla in China, the entry-level Model Y is once again eligible for the country’s NEV incentive, a move which will undoubtedly make the electric SUV even more popular in China.

Model 3 Price Changes

The Model 3 saw the smaller price cuts. The entry-level RWD variant dropped ¥14,000 to ¥265,900(~$50,100 CAD/$36,600 USD).

The price cut for the Model 3 Performance was a little more, dropping by ¥18,000 to ¥349,900 (~$66,000 CAD/$48,200 USD).

Model Y Price Changes

Following production line upgrades at Giga Shanghai that significantly increased Model Y output, the electric SUV saw even bigger price cuts.

The Model Y RWD was the recipient of the second biggest price drop and now is available for ¥299,500.

Now that the Model Y RWD is priced under ¥300,000, it is once again eligible for China’s purchase tax exemption, bringing the price down to ¥288,900 (~$54,500 CAD/$39,800 USD).

Even without the incentive, the Model Y is the second most popular SUV in China this year.

The biggest price drop belongs to the Model Y Long Range, going from ¥394,900 to ¥357,900 (~$67,500 CAD/$49,300 USD), a drop of ¥37,000.

Finally, the Model Y Performance dropped ¥20,000 to ¥397,900 (~$75,000 CAD/$54,800 USD).

Here is a breakdown of all the price changes.

Model 3 Model Y
Old Price New Price Difference Old Price New Price Difference
RWD ¥279,900 ¥265,900 -¥14,000 ¥316,900 ¥288,900 -¥28,000
Long Range N/A N/A N/A ¥394,900 ¥357,900 -¥37,000
Performance ¥367,900 ¥349,900 -¥18,000 ¥417,900 ¥397,900 -¥20,000

Tesla also made two other announcements to go along with the price cuts.

The first is that the insurance subsidy that has been offered since mid-September, and that was recently extended to the end of the year, has been cancelled effective immediately. That means any orders placed under the new pricing scheme will not be eligible for the incentive, which would have saved customers another ¥7,000 ($980 USD/$1,500 CAD).

Finally, after making a similar change in North America late last year, Tesla also updated the Design Studio to make Midnight Silver a free colour option, but strangely only for the Model Y RWD according to the Design Studio.

In their announcement Tesla did not give a reason for the price cuts, only saying they “will continue to bring better quality products and experiences to everyone.”

Despite an official comment, the price drops are likely the result of Giga Shanghai’s increased production capacity following production line upgrades earlier this year.

The upgrades had a particularly significant effect on Model Y production, which can now produce about 2,200 every day. Prior to the upgrades, combined Model 3 and Model Y production at Giga Shanghai was at around 2,500 units per day.

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