Tesla (TSLA) , the electric vehicle maker, slashed the starting price for its Model 3 sedans by 16% to 299,050 yuan ($42,919) after government rebates, according to its China web site.
The reduction was first reported by Reuters. The subsidy amounts to 24,750 yuan ($3,552) per vehicle.
The decrease puts the Model 3’s price only 13% above its entry Model X, Bloomberg reported. The price in China for imported Model 3s is 439,900 yuan ($63,133) before subsidies.
Given the lingering presence of the coronavirus in China, Tesla may have felt pressure to cut prices to stimulate demand. The pandemic has closed Tesla’s only U.S. plant in in Fremont, California.
Tesla began producing cars at a factory in Shanghai in January. That’s Tesla’s only plant outside the U.S. The first cars made at the plant will be delivered Monday.
The Model 3 is advertised as having a single-charge range of 415 miles, compared to 280 miles for the Model X.
Tesla faces heated sales competition in China from both foreign electric car makers, including Volkswagen and BMW, and local Chinese players. Telsa’s car registrations in China have dropped for two straight months, according to Bloomberg.
Tesla’s potential is huge in the U.S., but it has a long road ahead, said Morningstar analyst David Whiston.
“Tesla has a chance to be the dominant electric vehicle firm … , but we do not see it having mass-market volume for about another decade,” he wrote in a report last month.
Tesla shares closed Thursday at $573, up 4.4%. The stock has gained 19% in the last three months.