In a significant move, Tesla has discontinued the sale of its most affordable Model 3 variant in the United States. As of Wednesday, the Model 3 Standard Range Rear-Wheel Drive, priced at $38,990, is no longer available for purchase on Tesla's website. This decision comes in the wake of increased tariffs imposed by the U.S. on goods imported from China, including electric vehicles and their components.
The Model 3 Standard Range Rear-Wheel Drive utilizes lithium iron phosphate (LFP) battery cells imported from China. The recent U.S. tariffs include a 100% tariff on electric vehicles and a 25% tariff on EV batteries and essential minerals. These tariffs have made it economically unviable for Tesla to continue selling this model in the U.S. Additionally, vehicles with components made in China, such as the LFP battery cells, do not qualify for the $7,500 federal tax credit offered by the U.S. government.
Impact on Pricing and Availability
With the discontinuation of the Standard Range model, the Tesla Model 3 Long Range Rear-Wheel Drive has become the most economical option available in the U.S., priced at $42,490. This shift reflects the challenges faced by Tesla and other manufacturers due to the escalating trade tensions between the U.S. and China.
The European market is also feeling the effects of these tariffs. The European Union has imposed provisional countervailing duties on imports of battery electric vehicles (BEVs) from China, with duties ranging from 17.4% to 37.6% depending on the manufacturer. This has led to price increases for Tesla's Model 3 in several European countries, including Germany, the Netherlands, and Spain.
Global Trade Implications
The imposition of tariffs by both the U.S. and the EU on Chinese-made electric vehicles is part of a broader trade dispute. The EU is set to finalize additional tariffs of up to 35.3% on China-made EVs, on top of the existing 10% duty, citing concerns over unfair state support for Chinese EV companies. However, Chinese EV executives argue that their success is driven by intense local competition rather than state subsidies.
These tariffs have significant implications for the global EV market. Companies like Xpeng, a leading Chinese EV startup, are pushing for a fair level playing field as they expand into European markets. The ongoing trade tensions between China and Western countries could potentially spiral into a new trade war, affecting not just the automotive sector but other industries as well.
The environmental impact of these trade decisions is also a point of consideration. While electric vehicles are generally more environmentally friendly than internal combustion engine vehicles, the transportation of cars from China to other markets does contribute to emissions. However, studies suggest that even with these emissions, electric cars still offer significant environmental benefits compared to traditional vehicles.
For more information on the impact of tariffs on international trade, you can refer to the tariff page on Wikipedia.
