It worked for Apple: iPhone 5c, iPod Shuffle, MacBook Air...all much inferior to their predecessors. Tesla's introducing the Model 3 out after the success of its Model S. And Chinese companies make cheap knockoffs all the time. When it comes to hardware, you typically introduce the better stuff first. Then the next year, you ramp up the hardware just enough so that they want to switch to the next version.
The freemium business model works better in the case of software and apps, because people don't want to buy your software, but try it out first and then pay for the good stuff.