SHANGHAI (Reuters) -Tesla shares fell greater than 4% on Friday after the electrical automaker unveiled a restyled, China-made Mannequin 3 with an extended driving vary and a better worth.

The corporate additionally slashed the U.S. worth of its “Full Self Driving” (FSD) driver assistant software program by 20% to $12,000, whereas reducing costs of its premium fashions Mannequin X and Mannequin S.

The launch of the brand new Mannequin 3 sedan marks the primary time the automaker has rolled out a automobile in China forward of the U.S., underscoring its rising reliance on the nation the place it’s in a race for market share with BYD (SZ:).

The automobile is being constructed at Tesla (NASDAQ:)’s Shanghai plant and comes with a beginning worth that’s 12% larger than the earlier, base mannequin in China. It’ll even be exported to different markets in Asia, Europe and the Center East.

Tesla minimize the costs for its premium Mannequin S and Mannequin X by between about 14% and 21%, in China and the U.S. – its two greatest markets.

Elevating the bottom worth on the Mannequin 3, Tesla’s top-selling mannequin after the Y, may assist defend margins. However the worth cuts for its extra premium vehicles spotlight the extraordinary competitors EV makers face, particularly in China.

To bolster its market share, the automaker led by Elon Musk has began a worth warfare this yr that has boosted deliveries however despatched its industry-leading margins to a four-year low.

Tesla’s much-touted FSD, whose expertise has been within the crosshairs of regulators over security considerations, will now price $12,000.

CHINA-FIRST DEBUT

The brand new Mannequin 3 is Tesla’s first change to its mass-market automobile line-up because it launched its international best-seller, the Mannequin Y, in 2020.

Tesla didn’t announce a launch date for the brand new Mannequin 3 within the U.S. market, the place it at present gives reductions of greater than $5,000 on a few of these autos in stock. The Mannequin 3 can also be assembled in Fremont, California.

Tesla plans to debut the most recent Mannequin 3 at a commerce honest in Beijing on Saturday and a few of its new options, together with a rear show for back-seat passengers, appeared geared toward Chinese language automobile patrons.

Tesla stated the automobile additionally has a greater acoustic system, a extra snug inside and extra airbags. Photographs of the outside confirmed small adjustments that gave the sedan a sleeker entrance and new headlights.

The brand new Mannequin 3 additionally guarantees an extended driving vary. The usual model has a spread of 606 km (377 miles) primarily based on China’s testing requirements. That’s about 9% larger than the bottom mannequin it replaces in China.

Tesla stated it had began taking orders and would start deliveries in China within the fourth quarter. It’s also taking orders in different markets the place it exports from Shanghai, together with Germany, Japan, Malaysia, Australia and New Zealand.

The brand new Mannequin 3 ought to promote effectively exterior China the place there may be much less competitors in EVs, stated Yale Zhang, managing director at Shanghai-based consultancy Automotive Foresight.

“However in China, we’ve already seen loads of new fashions rolling out for the reason that (Shanghai) auto present in April with comparable and even higher options and decrease costs,” he added.

PROJECT ‘HIGHLAND’

Reuters first reported final November that Tesla was creating a revamped Mannequin 3 in a undertaking codenamed “Highland”. Individuals concerned within the undertaking stated it was geared toward reducing manufacturing prices and boosting the mannequin’s attraction.

Tesla didn’t give any particulars concerning the new Mannequin 3’s battery, however an individual with data of the options stated it was the identical lithium-iron-phosphate battery from CATL for the bottom mannequin.

The upper vary is the results of taking weight out and bettering the automobile’s profile so it faces much less wind resistance, the individual added. There was no quick remark from Tesla concerning the battery.

In China, the Mannequin 3 competes towards BYD’s Seal, the Zeekr 001 from Geely, Nio (NYSE:)’s ET5 and Xpeng (NYSE:)’s P7i. Xpeng has simply introduced zero-interest loans and free upgrades for that automobile.

Tesla stated it could additionally present the brand new mannequin on the Munich auto present, probably stealing thunder from German automakers comparable to Volkswagen (ETR:) and Mercedes. They’re anticipated to announce a slew of recent EVs, partly in response to China’s fast-shifting market.

In China, the brand new Mannequin 3 begins at 259,900 yuan ($35,807). In Germany, it begins at 42,990 euros ($46,670). Tesla stated it could start deliveries in Europe in late October.

($1 = 7.2582 , $1 = 0.9211 euros)