Tesla Cuts Model 3 Price in China as EV Competition Heats Up
The move, coming just a month after the new variant's launch, signals pressure from domestic rivals in the world's largest auto market.
Tesla has reduced the price of its recently launched Model 3 sedan in China, a strategic move signaling pressure in the world's most competitive electric vehicle market. The price of the rear-wheel drive Model 3 was lowered by 3.7% to 259,500 yuan (approximately $36,279), . The adjustment comes less than a month after the updated vehicle's debut, highlighting the automaker's challenge to maintain momentum against aggressive local rivals and slowing demand growth.
The price cut is the latest salvo in an ongoing price war across China's EV sector. Tesla faces formidable challenges from domestic manufacturers, who are gaining market share with a diverse range of models and aggressive pricing. , which commands a substantial portion of the market, and new entrants like tech giant Xiaomi, has eroded Tesla's former dominance. Local brands are increasingly seen as superior in adapting to consumer preferences with advanced software and localized features.
This pre-emptive price reduction follows a period of weakening sales for the American automaker in China. Despite the overall Chinese EV market reaching a significant milestone with , Tesla has struggled to keep pace. The company reported a year-on-year decline in China deliveries for the second quarter of 2025 and saw its vehicle registrations fall nearly 7% year-to-date as of August.
While the price adjustment may help stimulate short-term demand for the new Model 3, it also raises concerns among investors about pressure on Tesla's profit margins. The move underscores a strategic shift from maintaining premium pricing to defending market share in a critical growth market. As local Chinese brands continue to innovate and expand their offerings, Tesla's ability to compete effectively on both price and features will be a key determinant of its long-term success in the region.