Tesla Won't Release New Model 3 In China; Stock Gives Back Weekly Gains

Tesla said it won’t be releasing a stripped-down, cheaper version of the Model 3 in China this year, effectively confirming that it will offer no new car models in the 2026 market.

China is Tesla’s second-largest market after the U.S., and the world’s largest car market. The news comes as Tesla’s global sales have been on a sharp down trend for over a year. However, monthly retail sales in China did recover in February, growing 42% year over year.

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Tesla stock is down about 2% on Friday, ceding its gains from earlier in the week and tacking toward a sixth straight weekly decline.

No New Model 3 In China

Tesla has not converted any production lines at its Giga Shanghai factory to build the cheaper Model 3, according to CnEVPost, which cited local Chinese outlet Caiwen. The Shanghai factory will continue producing the current Model 3 sedan and Model Y SUV, per CnEVPost.

The news comes after rumors emerged that Tesla planned to launch the trimmed-down Model 3 in China. Tesla does have an affordable version of the Model 3 in the U.S., which has a starting price of just under $37,000.

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China has a cutthroat market for affordable electric vehicles. Rival EV makers offer ultracompact cars that cost as little as $5,000 such as the Bestune Pony and the Wuling Hong Guang Mini EV. BYD has the Seagull model, which starts at about $8,000. Meanwhile, other EV companies, like Xiaomi, have direct competitors to Tesla models that are cheaper. For example, Xiaomi’s newly released SU7 starts at about $31,870 — lower than cheapest Model 3 at around $32,100.

In recent months, Tesla has been clear it intends to transition its business away from auto sales and toward self-driving technology, robotaxis, and humanoid robots. However, in the short-term, it must still rely on auto sales for its top-line growth and cash flows. In Europe, Tesla monthly vehicle registrations rose last month for the first time in more than a year, according to data from the European Automobile Manufacturers Association.

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Tesla Stock

On Friday, Tesla stock traded almost 3% lower.

Shares rallied early in the week after CEO Elon Musk announced Tesla would partner with one of his other companies, SpaceX, to build a semiconductor factory. The stock popped again later in the week on reports SpaceX might file for an IPO as soon as this week.

However, the stock gave back those gains later in the week amid a broad market slump and analyst projections of declining vehicle deliveries in the first quarter. The stock is now down about 1% this week, trading at its lowest level since September. If the stock should finish down this week, it would mark the sixth consecutive week of declines.

Tesla stock is down about 17% this year.

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