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The Cheapest Tesla Model 3 In China Is Still Very Expensive

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At least by US standards.

While many in the US are clamoring for the long-awaited $35,000 base trim Tesla Model 3, a less expensive version of the wildly popular EV sedan has officially gone on sale in China, the world's largest automotive market. According to Reuters, Tesla just started taking orders for this trim in a country currently at odds with the US regarding trade, but it isn't exactly cheap there.

The long-range, rear-wheel-drive Model 3 will carry a starting price of 433,000 yuan, or roughly $64,300. That's actually less than the 499,000 yuan ($74,000) for the all-wheel-drive long-range version that's already on sale. So why is Tesla charging quite a bit more money for the same vehicle sold in the US and elsewhere? Blame tariffs.

However, Tesla will soon open a factory in Shanghai and the first vehicle it will build is the Model 3. But for now, Tesla appears to be struggling somewhat to get enough Model 3s to China to satisfy demand. That new factory won't be built overnight, after all. "It's very important to get those cars, especially to China, as soon as possible. We hope the trade negotiations go well, but it's not clear. But we need to get them there while there's sort of a de facto - sort of a truce on the tariff war," said CEO Elon Musk. Tesla supposedly had to send two ships and one cargo plane full of Model 3s to China.

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If all goes to plan, and it rarely does, at least for Tesla, that new Shanghai factory will be up and running in the second half of this year. Once it does, the aim is to manufacture 3,000 Models 3s per week. That Chinese factory will also have direct consequences for Tesla's US operations; it needs to free up space in its Freemont, California factory in order to accommodate the upcoming Model Y small crossover, which happens to be based on the Model 3.

It's a production balancing act Tesla has yet to fully master. But the high demand for Model 3s in China will surely provide Tesla with a solid cash infusion (after the Chinese government takes its cut) that can be invested where it's needed most.