Evaluation: Tesla’s Mannequin Y will show to be a disruptive issue if electrical automobile gross sales in China rise in 2021

By Yilei Sun and Brenda Goh

BEIJING / SHANGHAI (Reuters) – New models will boost electric vehicle sales in China this year after business was lukewarm in a virus-ridden 2020. Analysts predict that pricing for Tesla’s Model Y (NASDAQ 🙂 will become a major disruptive factor in the world’s largest auto market.

Tesla Inc, which became the World’s Most Valuable Automobile Manufacturer last year, began selling locally-made Model Y SUVs in China this month for almost a tenth less than gasoline-powered luxury cars with similar market positioning.

Starting at 339,900 yuan ($ 52,376), or 10% below the official prices of Daimler’s Mercedes GLC (OTC :), BMW X3, and Audi Q5L – all locally made gasoline sport utility vehicles (SUVs) of similar size and size Positioning.

“Pricing will disrupt the conventional premium car market and destroy the traditional belief that the cost of an electric vehicle (EV) should be higher,” said Cui Dongshu, general secretary of China Passenger Car Association (CPCA).

Tesla Model Y prices – the price to be beaten, according to analysts – and new models from others like Mercedes and BMW will help fuel demand in China, which also accounts for nearly half of global EV sales.

Sales of so-called New Energy Vehicles (NEVs) in China, which include battery-electric, plug-in hybrid and hydrogen fuel cell cars, are expected to increase by 30-40% to around 1.8 million units in 2021, according to the Association the Auto Industry China Association of Automobile Manufacturers and Analysts.

NEV sales probably rose only 8% to 1.3 million last year, falling short of the government’s target of annual sales reaching 2 million by 2020 as the COVID-19 pandemic forced people indoors and the Undermined demand in the first few months of the year.

China’s decision to extend EV subsidies by two years instead of letting them expire by the end of 2020 will also support demand in 2021. Beijing wants NEVs to account for 20% of all auto sales by 2025, up from around 5% now.

Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight, said stricter regulations in some cities to encourage cleaner vehicles and reduce air pollution are also likely to force urban customers to buy electric vehicles.


NEV manufacturers such as Nio (NYSE 🙂 Inc and Xpeng Inc, as well as foreign companies such as Tesla, are expanding their production capacities in order to meet growing demand.

Tesla is expected to manufacture “around or over half a million” vehicles in China this year, with around 20% earmarked for international exports, industry sources said, knowing Tesla’s orders to suppliers, said.

That’s a big increase from 2020, when Tesla produced around 150,000 cars, according to analysts.

Tesla did not immediately respond to a request for comment.

Tesla’s China website reveals that customers who place orders for the Model Y will have to wait until Q2 for delivery.

It offers customers the same financing tools for the Model Y as it does for the Model 3 sedan, which allows buyers to prepay just 10% of the cost when they receive the car.

Tesla’s Model 3, which has been manufactured in China for over a year, also shows the dominance of Daimler, Audi and BMW in the conventional premium automotive sector.

The Shanghai-made 3s model sold similarly positioned and more expensive Audi A4, BMW 3-series and Mercedes C-Class in November, data from CPCA shows.

“Competitive pricing is key,” said Cui of CPCA.

($ 1 = 6.4896)

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