(Yicai Global) Nov. 24 -- US electric car startup Tesla has raised the price of its China-made Model 3 twice in the past week, with a cumulative increase of nearly CNY20,000 (USD3,100), to offset a decrease in government new energy vehicle subsidies and as it upgrades the existing model.

The California-based firm first increased the price of its Model 3, manufactured at its Shanghai Gigafactory, by CNY15,000 (USD2,348) on Nov. 19 as it brought in an upgraded model with a longer range of 556 kilometers. This was then followed by another price tweak of CNY4,752 yesterday for both the Model 3 and the Model Y.

The main reason for the latest price hike is because government subsidies have been dropping consistently since last year and are due to fall by a further 30 percent year on year in 2022, a company insider told Yicai Global. Also, only NEVs priced under CNY300,000 (USD47,000) are eligible for subsidies.

The entry level Model 3 priced at CNY266,740 enjoys a state subsidy of CNY15,840 (USD2,500) which Tesla expects to drop to CNY11,088 next year. Its China-produced Model Y retails at a starting price of CNY280,700.

Tesla has managed to slash the price of its Model 3 and Model Y in China several times before, thanks to the cost advantage of producing locally. As a result, China is now its largest market outside the US. Sales of the Model 3 jumped 21.9 percent in the first 10 months to 112,173 units and it shifted 106,236 Model Ys in the period, according to the China Passenger Car Association.

Editors: Dou Shicong, Kim Taylor