The American electric vehicle (EV) maker will assemble a six-seat Model Y variant at its Shanghai Gigafactory next year, aiming to target middle-income households in the world’s largest auto market, according to two people familiar with the company’s plans.
The plan to revamp the Model Y is part of a project codenamed “Juniper” launched last year. It comes after the leader in China’s premium EV segment lost more than half its market share amid fierce competition and price cuts.
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“Tesla has to step out of its comfort zone as several automakers have introduced models to challenge its best-selling Model Y,” said Zhao Zhen, sales director at Shanghai dealership Wan Zhuo Auto. “This is a market with discerning consumers who always want to buy the best products at the lowest prices.”
The Shanghai-produced Model Y currently features five seats in two rows for the Chinese market, while the updated version for North America is equipped with seven seats. Two seats, which some say “barely fit a large dog,” are crammed into the third row.
According to some media reports, a six-seat configuration for the Chinese market would strike a balance between capacity and space, placing two seats in each of the three rows and folding the middle seat in the second row for easier egress.
The refreshed version will likely compete against Li Auto’s L8 and L9, two large sport utility vehicles (SUVs) that have won over thousands of wealthy families in mainland China. The Beijing-based automaker sold about 95,000 L8 and L9 models in the first seven months of this year, according to industry data.
Tesla’s Shanghai factory delivered 500,740 Model 3 and Model Y units to mainland customers in the first seven months of this year, down 7.4 percent from a year earlier. Its share of China’s pure-eV market was 9.6 percent, compared with a record 22.9 percent in March 2021, according to data provider CnEVPost.
A Model Y car is displayed at Tesla’s booth during the World Internet of Things Exposition in Wuxi, China in October 2023. Photo: Bloomberg alt=A Model Y car is displayed at Tesla’s 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 ranges and more advanced digital technologies,” said Eric Han, a senior manager at Suolei, a Shanghai-based consultancy. Chinese automakers are also selling at lower prices, he added.
The Shanghai-produced Model Y, with a list price of 249,900 yuan (US$35,113), is mainland China’s best-selling mid-size SUV, topping all electric and petroleum-powered models in its segment. The base version can travel up to 554 km (340 miles) on a single charge.
Over the past three months, several Chinese brands have launched new models specifically aimed at the Model Y, hoping to lure customers away from the American manufacturer.
Nio’s Onvo L60, Geely Automobile’s Zeekr 7X and IM Motors’ LS6 are putting pressure on Tesla as young Chinese consumers view the Model 3 and Model Y, which it produces domestically, as outdated models.
“Tesla is superior to its local competitors in terms of brand recognition, production efficiency and mature technologies,” said Jack Yu, a 20-year-old university student in Shanghai who plans to buy his first car with 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, the Onvo L60, has a range of 555 km and costs 219,900 yuan, or 12 percent cheaper than the base version of Tesla’s Model Y.
Tesla is currently offering interest-free loans to buyers of the Model 3 and Model Y, allowing customers to save at least 20,000 yuan on a 200,000 yuan loan with a five-year term.
This article originally appeared in the South China Morning Post (SCMP)the most authoritative voice covering China and Asia for over a century. For more SCMP stories, 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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