Tesla Inc’s (NASDAQ: TSLA) Model Y electric vehicle will help increase sales and emerge as a major disruption of the country’s auto market in 2021, analysts estimate, as reported by Reuters on Monday.
What happened: China – the world’s largest car market – this month launched the locally manufactured Model Y sports utility vehicle at a price of 339,900 RMB ($ 52,376), which is less than a tenth of petrol-powered luxury cars with a similar position in the market by Daimler AG (OTC: DDAIF), Bayerische Motoren Werke AG (OTC: BMWYY), and Volkswagen AG (OTC: VWAGY), according to Reuters.
“Pricing will disrupt the conventional premium car market and break the traditional belief that the cost of an electric vehicle (EV) should be higher,” Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), told Reuters.
See also: Tesla launches $ 25,000 EV sedan in China by 2022: Report
Tesla’s Model 3 sedan, manufactured in Shanghai, sold out similar positioned cars manufactured by luxury carmakers in November, according to CPCA data.
Why it matters: The price of Model Y from Tesla would set a benchmark for carmakers to beat and push demand, according to Reuters.
The ongoing pandemic increased sales of the New Energy Vehicle (NEV), which reportedly rose 8% in 2020 to 1.3 million – behind the Chinese government’s annual sales target of 2 million.
The Chinese Association of Automobile Manufacturers and Other Analysts estimates that sales of NEV – which includes battery-electric, plug-in hybrid and hydrogen fuel cell motors – will grow 30-40% this year to nearly 1.8 million units.
Extending the government’s EV subsidies by two years will also raise demand, as Beijing wants NEVs to make up 20% of car sales by 2025 instead of the current 5%, according to Reuters.
Nine competition: Tesla, other foreign players, along with domestic competitors such as Nio Ing (NYSE: NIO), Xpeng Inc. (NYSE: XPEV) increases production to meet expected demand.
Nio unveiled its first sedan, the et7, during the Nio Day event on Saturday. William Li, CEO of the company, said this week that the carmaker could make cheaper mass-market cars under a different brand.
Li explained that the EV manufacturer does not see that its new sedan is in direct competition with Tesla, but according to Bill Russo, CEO of Automobility Ltd., Nio is well positioned to capture a large part of the Chinese EV market to lie.
The price of et7 as’ fairly competitive with Tesla’s Model S ‘is a statement of aspiration’ from the carmaker, Russo told CNBC on Monday.
Price action: Tesla shares closed nearly 7.8% lower at $ 811.19 on Monday and rose 0.9% in the after-hours session.
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