Tesla recently announced the price of its China-made Model 3. With a top asking price of USD 47,000, the model is much more expensive than in the United States, where it sells for USD 35,000.
Tesla has announced that it is downgrading the software of some Model 3 cars that have already been delivered in China, saying the cheaper versions won't have the same features and configurations as the higher-priced variant.
The company sent an email to owners that read:
“Your Model 3 will soon receive new software that matches the Model 3 Standard Range configuration you ordered. As we communicated in April, this includes a limited range of 220 miles and the removal of several software features. To continue experiencing the extended range, faster acceleration and Autopilot features of Model Standard Range Plus, schedule a service appointment through your Tesla app.”
Earlier this year, Tesla launched its base Model 3 whose price started at USD 35,000. Traditional car companies equip their models with different hardware, depending on the versions. But some of Tesla's Model 3 variants have nearly identical hardware configurations, with only slight differences in software settings.
"Its range will be limited by 10%, and several features will be disabled via software (including our onboard music streaming service, navigation with live traffic visualization, and heated seats)," Tesla said in its email to owners.
But users will have to wait for software updates to know which features they are losing. Although they can pay extra to unlock these upgrades, it remains to be seen whether some buyers are willing to pay for the standard plus configuration.
Some of Tesla's practices such as its pricing strategy have drawn rebukes from the media and consumers. In March, Elon Musk, founder and CEO of Tesla, unveiled the Model 3 with a starting price of USD 35,000, which is about the same as a new car sold in the United States.
This marked a milestone for electric cars, as their prices have gradually fallen to the level of conventional gas-powered cars, a development that has tremendously lowered the bar for ordinary people to get their hands on an electric vehicle. The price drops have led to more than 400,000 global orders for the Model 3.
But the company has continued to produce the higher-priced Model 3, which costs USD 40,000, in order to make a profit and has deferred the sale of the USD 35,000 standard Model 3.
Tesla has a history of backpedalling on planned sale of the standard Model 3. For example, it eliminated online sales channels last year, forcing consumers to buy only from offline dealerships.
Tesla's technology and affordability has also been called into question by Chinese EV car startup Xpeng Motors.
Tesla China released the starting price of its Model 3 Standard Range Plus – at CNY 328,000 (USD 47,530.03) – on May 31.
In response, He Xiaopeng, chairman of Xpeng Motors, wrote on social media that "to be honest, I don't think the Model 3 (without the autopilot) is competitive, and should at least fall by another USD 10,000 (to become competitive). I believe that Tesla has no battery advantage or intelligence difference compared with Xpeng."