Model 3 with cheaper battery on sale soon, price drop leak $4,000

Tesla will commence sales of its China-made Model 3 with a cheaper, less energy dense lithium iron phosphate (LFP) battery that will reportedly most more than 20,000 yuan (about $A4,000) less than the current price.

Made at Tesla’s Shanghai gigafactory, the Standard Range Plus (SR+) Model 3  with Tesla’s standard nickel-manganese-cobalt (NMC) battery currently costs from 271,550 yuan ($A55,717 converted) before subsidies.

Tesla sold more than 70,000 Model 3s up until the end of August in China, where it is the most popular electric vehicle, outselling its nearest competitor by a factor of three.

However,  the Standard Range Plus variant with NMC battery will soon be replaced by the LFP SR+ Model 3, Reuters reports.

Two sources told the news agency that the change over could be as soon as this week, but Tesla was not available for comment. A check of the EV maker’s official Weibo channel shows no update at the time of writing.

According to Chinese Tesla watcher Kelvin Yang, once Tesla start using the LFP battery in its China-made Model 3, it will price it at 250,000 yuan ($A51,300 converted) instead.

In doing so, it would stop making the NMC SR+ Model 3. Yang also reported that his sources told him Tesla will drop the range of the Long Range Model 3, but subsequently said that the LFP battery is not suitable for longer ranges.

If this vehicle is brought into Australia, as sources told Bloomberg in September, pricing for the Standard Range Plus in Australia could come down as low as $A61,200 before on-road costs, according to The Driven’s China-made pricing estimator.

But the trade-off would possibly be a shorter range, as the LFP chemistry stores less energy per gram than batteries with nickel in them.

The LFP battery will be provided by Chinese Amperex Technology Limited (CATL) to Tesla, as was revealed by CATL boss Zeng Yuqun in May.

At Tesla’s recent Battery Day, CEO and co-founder Elon Musk outlined a plan to work on higher density batteries using more nickel for vehicles with more demanding power requirements such as the Semi and Cybertruck, freed up by shunting lower density battery supplies to entry models like the Model 3 Standard Range Plus.