This paper describes the first implementation of the d x=3.25 km version of the Energy Exascale Earth System Model (E3SM) global atmosphere model and its behavior in a 40 day prescribed-sea-surface-temperature simulation (Jan 20-Feb 28, 2020). This simulation was performed as part of the DYnamics of the Atmospheric general circulation Modeled On Non-hydrostatic Domains (DYAMOND) phase 2 model intercomparison. Effective resolution is found to be $\sim 6x the horizontal grid resolution despite using a coarser grid for physical parameterizations. Despite this new model being in an immature and untuned state, moving to 3.25 km grid spacing solves several long-standing problems with the E3SM model. In particular, Amazon precipitation is much more realistic, the frequency of light and heavy precipitation is improved, agreement between the simulated and observed diurnal cycle of tropical precipitation is excellent, and the vertical structure of tropical convection and coastal stratocumulus look good. In addition, the new model is able to capture the frequency and structure of important weather events (e.g. hurricanes, midlatitude storms including atmospheric rivers, and cold air outbreaks). Interestingly, this model does not get rid of the erroneous southern branch of the intertropical convergence zone nor the tendency for strongest convection to occur over the Maritime Continent rather than the West Pacific, both of which are classic climate model biases. Several other problems with the simulation are identified, underscoring the fact that this model is a work in progress.