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Tesla’s Entry into South Korea’s EV Market Gets a Boost with Cheaper Model Y

Tesla began selling a cheaper Model Y vehicle on Friday in South Korea, slashing the price to make it eligible for the maximum rate of government subsidies. The rear-wheel drive Model Y costs 56.99 million won ($45,139) in the country and is available for delivery between August and September. The electric vehicle maker previously sold the car’s dual-motor performance and long-range versions in the country, which cost around $80,000 and $62,000 last year, respectively.

The new version uses a lithium iron phosphate battery made by China’s Contemporary Amperex Technology Co. The battery is a critical component of the Model Y because it helps achieve its impressive driving range. The EV boasts a cruising range of 350 kilometers (217.48 miles) in Korean standard test conditions, the company says on its website. According to the company, the actual mileage may vary depending on driving habits, weather conditions, and altitude.

In Seoul, prospective buyers can receive 8.6 million won (about CAD 7,300) in subsidies for electric vehicles priced below 57 million. The new Model Y is expected to be competitive in the city with the Kia e-Niro and Hyundai Ioniq 5, which offer some form of autonomous driving but are not built on dedicated electric vehicle platforms.

Tesla also lowered the prices of its Model 3 in 2021 to make it more affordable for potential customers. The move was part of an effort to increase sales and cut production costs after the automaker’s manufacturing problems were exposed in mid-2021.

In South Korea, the carmaker has been facing a possible US$2.2 million fine for misleading consumers about the driving range of its electric cars in cold weather. The country’s antitrust watchdog said Tesla had exaggerated its EVs’ driving range, fuel-cost effectiveness, and the performance of its Superchargers on its official local website from August 2019 until recently.

Tesla responded to the criticism by offering tips to drivers to improve their EVs’ performance in winter, such as preconditioning their vehicles and using its Energy app to monitor charging power. The company also offers a warranty on its EVs that covers damage caused by freezing temperatures.

Despite its troubles, the company remains popular among customers in Asia. IT professional Kim Dong-hwan, who bought a Model 3 in South Korea last year, told Reuters that he was happy with his purchase, even though his car had a panel gap that has yet to be fixed. He says the Model 3’s self-driving feature has reduced fatigue on his long commute and was worth putting up with the inconvenience of waiting for repairs.

The lowered pricing of the Model Y in South Korea could help Tesla regain momentum in the region as it faces stiff competition from rivals such as Chinese automakers and reborn European brands. However, Tesla is still the clear leader in premium electric vehicles. The firm’s stock has risen more than 50 percent this year.

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