Before Tesla's great model Y reveals event Thursday night (March 14) in Los Angeles, CEO Elon Musk has plagued details of the latest addition to his lineup, another SUV.
Tesla already has a premium SUV, model X. But the new car is probably more compact than the premium version, and more in price to model 3 sedan, the price of which was recently cut to $ 35,000 for the most basic variety . To reduce costs and make production easier, Model Y will share 75% of model 3 parts.
Tesla's new focus on affordability comes as it seems to push model 3 globally, with deliveries starting last month in Europe and China ̵[ads1]1; the largest foreign market and the world's largest electric vehicle market, where electric vehicle sales could reach seven million annually in 2025. Tesla is a deeply admired brand in China, but represented only a fraction of 1.2 million electric cars sold in the country last year. It is largely on price.
Tesla Model S and Model X have starting prices of more than 700,000 yuan ($ 115,000) in China, significantly more than they cost elsewhere. Even model 3 costs between $ 60,000 and $ 77,000 (Chinese link) for the latest cuts. Tesla has already started building a Gigafactory in Shanghai that will focus on making model 3 and model Y for local sales, but the latter is not expected to be produced on a scale until the end of 2020. Meanwhile, there are already a number of electric SUVs available from about 80 electric cars (paywall) in China.
Autohome, a site tracking car prices and models in China, shows that there are 48 electric SUVs (Chinese link) available on China's market. While it is still too early to draw a direct comparison with the limited details of model Y out there, several of these models may end up competing with model Y if it offers similar model 3 specifications, says angus chan, an analyst based on Shanghai for Bocom International.
China has at least 16 models (link in Chinese) in the compact SUV category. But while model Y could start at around 450,000 yuan ($ 67,000) with a range slightly less than 523 kilometers in Model 3, the likely competitors, China's leading EV manufacturers, offer less than half.
BYD, China's best-selling electric car manufacturer in 2018, offers Song, an electric SUV model equipped with a battery area of 400 kilometers. The song's starting price is around 190,000 yuan ($ 28,000). The company sold about 33,000 of the model (link in Chinese) in 2018, according to China's online news portal Sina.
BJEV, a state producer, has EX5, which starts with an even lower price of 170,000 yuan (the link in Chinese), and has a battery area slightly higher than the song.
Great Wall, which last month sold most SUVs in China, including both electric and fossil, ORAiQ with battery range starting at 360 kilometers, it is priced at around 190,000 yuan (link in Chinese ). Great Wall sold around 3,600 ORAiQ in 2018, according to data from the company (link in Chinese).
There is also Xiaopeng, a five year old EV startup inspired by Tesla. The standard model of the Xiaopeng G3 starts at around 160,000 yuan (Chinese link) with a 351-mile battery area. Xiaopeng has delivered 24 G3 cars in December.
EV Boot The NIO's upcoming ES6, a five-seat SUV, starting at 358,000 yuan with a 510-kilometer battery area, can also end up competing with model Y, said John Zeng, director of the research company LMC Automotive & # 39 ; China's office. NIO's CFO Louis Hsieh said in 2018 revenues that NIO will begin deliveries of ES6, which could come to NIO's showrooms as soon as May.
Even in the luxury segment, Tesla already faces competition from the domestic market. Nine seven-seater SUV ES8 was reportedly the best-selling luxury SUV in December, according to CleanTechnica. NIO sold ES8 11 348 in 2018, while Tesla sold around 16 360 cars in China, according to data from LMC Automotive. Tesla refused to comment on the sales figures.
Venturing in the mass market segment could carry other dangers for Tesla in China, where the company's recent price adjustments for sea sawns have caused rebellion among Tesla owners.
Some buyers have lost tens of thousands of dollars because they bought Model X just before the reduction in late February, which cost them an additional $ 26,000 compared to the price now. Others were dissatisfied because they had wanted to be associated with a luxury brand.
A female Tesla owner, the surname Yuan, said in an interview (video, link in Chinese) that she did not run Tesla anymore in December after the fall: "It used to be a cool thing that drives this around … [the price cuts] hit hard on the brand's identity. "
"Tesla should be careful when adjusting the price," said Toliver Ma, an investment analyst and investment firm Guotai Junan International. "Lowering their price will damage their brand image, as the higher price partially represents their premium in the market."
Sometimes it seems that Musk is not so sure about the wisdom of his ever-changing pricing strategy. In response to questions about pricing strategies on Twitter, Musk said the prices of Tesla's options, such as Enhanced Autopilot and Full Self-Driving, will return to normal on Monday.
As it gets on the road, the Tesla model Y will come to increasing competition globally from traditional fossil fuel car manufacturers venturing into the electrical market. Volvo Cars, the Swedish car manufacturer owned by Chinese car company Geely, said that it will have 50% of car sales to be electric six years from now. Germany's Audi and Mercedes Benz also roll out electric cars in Europe and China.
By 2020, Tesla will face a completely different situation, as the majority of car brands will roll out new electric vehicle products, said Zeng, LMC Automotive analyst. Tesla will end up with just a niche market if it continues to focus on the premium branding position, he added.
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