The US electric vehicle (EV) maker will assemble a six-seat Model Y variant at its Shanghai Gigafactory next year to take a shot at middle-income households in the world’s largest automotive market, according to two people with knowledge of the company’s plans.
The plan to revamp Model Y is part of a project code-named “Juniper” launched last year, and comes after the leader in China’s premium EV segment lost more than half of its market share amid stiff competition and price cuts.
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“Tesla has to step out of its comfort zone now that several carmakers have introduced models to challenge its bestselling Model Y,” said Zhao Zhen, a sales director at Shanghai-based dealer Wan Zhuo Auto. “This is a market with picky consumers who always want to buy the best products at the lowest prices.”
The made-in-Shanghai Model Y is currently configured with five seats in two rows for the China market, while its refreshed version in North America comes in seven seats, where two seats – described as “barely able to fit a large dog” – are squeezed into the third row.
A six-seat configuration for the China-only market would balance capacity with spaciousness, putting two seats in each of the three rows and collapsing the middle seat in the second row for easier egress, according to some media reports.
The revamped version is likely to take on Li Auto’s L8 and L9, two large-size sport utility vehicles (SUVs) that have won over thousands of rich families in mainland China. The Beijing-based carmaker sold about 95,000 L8 and L9 models in the first seven months of this year, according to industry data.
Tesla’s Shanghai factory handed 500,740 units of Model 3 and Model Y to mainland customers in the first seven months this year, a 7.4 per cent drop from a year earlier. Its share of China’s pure EV market stood at 9.6 per cent, versus a record 22.9 per cent in March 2021, according to data provider CnEVPost.
A Model Y car is displayed at the Tesla booth during the World Internet of Things Exposition in Wuxi, China in October 2023. Photo: Bloomberg alt=A Model Y car is displayed at the Tesla booth during the World Internet of Things Exposition in Wuxi, China in October 2023. Photo: Bloomberg>
“Tesla is losing its appeal among Chinese drivers because they have more options from local brands with longer driving range and more sophisticated digital technologies,” said Eric Han, a senior manager at Suolei, an advisory firm in Shanghai. Chinese carmakers are also selling at lower prices, he added.
The Shanghai-made Model Y, with a catalogue price of 249,900 yuan (US$35,113), is mainland China’s bestselling midsize SUV, topping all electric and petroleum-driven models in its segment. Its basic edition can go as far as 554km on a single charge.
Over the past three months, several Chinese brands have launched new models aimed squarely at Model Y, hoping to lure customers away from the US producer.
Nio’s Onvo L60, Geely Automobile’s Zeekr 7X and IM Motors’s LS6 are piling up the pressure on Tesla, whose locally-assembled Model 3 and Model Y are viewed as ageing models by young Chinese consumers.
“Tesla is superior to its local competitors in terms of brand awareness, production efficiency and mature technologies,” said Jack Yu, a 20-year-old university student in Shanghai, who plans to buy his first car with the financial support from his parents. “I considered buying a Tesla, but changed my mind because there are better options from Chinese EV companies.”
Nio’s entry-level version of Onvo L60, which has a driving range of 555km, is priced at 219,900 yuan, or 12 per cent cheaper than the basic edition of Tesla’s Model Y.
Tesla currently provides interest-free loans for buyers of its Model 3 and Model Y vehicles, allowing customers to save at least 20,000 yuan on a five-year loan of 200,000 yuan.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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