Tesla Drops Model 3 RWD in U.S. After New Tariffs on Chinese Batteries

Tesla has removed the base Model 3 Rear-Wheel Drive (RWD) in the U.S., shifting its entry-level trim to the Model 3 Long Range RWD, which starts at $34,990 (including the $7,500 federal EV credit) and offers a range of 363 miles per charge.

The decision comes just days after the Biden administration raised tariffs on Chinese electric vehicles imported to the U.S. to 100% (from 25%), and increased tariffs on lithium-ion batteries and battery parts to 25% (from 7.5%).

While the base Model 3 RWD was manufactured in California, it used a Chinese-made lithium iron phosphate (LFP) battery, making it ineligible for the $7,500 federal EV tax credit. Benefits of LFP batteries include the ability to charge up to 100% without no ill effects.

In contrast, the Model 3 Long Range RWD, which uses a different battery, qualifies for the credit, making it a more attractive option for buyers.

However, the LFP Model 3 RWD remains available in Canada, where the recent tariff changes do not apply. Tesla will likely send Model 3 RWD with LFP batteries to Canada. For U.S. customers, the shift to the Long Range RWD trim means losing access to the more affordable base option, marking a significant change in Tesla’s offerings stateside.