The upcoming Tesla Model Y, made in China, could increase Tesla’s sales in the important market by a factor of 4 with a cheaper version, says an analyst.
Tesla is preparing to launch its second car, manufactured at the Gigafactory Shanghai: Model Y.
In the last 9 months, Tesla has been expanding the factory to prepare for the production of the electric SUV.
The plant doubled in size to prepare for the production of the Y model.
Tesla has never confirmed the planned production capacity of the Model Y at Gigafactory Shanghai, but now a report by a local analyst suggests that this could quadruple Tesla’s sales in the country.
Tianfeng Securities, a brokerage firm that closely monitors Tesla in China, said in a new note to customers that it sees Model Y sales reaching 30,000 units per month:
Tianfeng Securities also estimates that after mass production of the Chinese Model Y, monthly sales are expected to reach 30,000 and annual sales to reach 360,000. Tesla̵7;s total sales are estimated to reach 880,000 in 2021, which is an increase of 76% on an annual basis. And sales in 2022 will reach 1.28 million, an increase of 45% on an annual basis.
In the last quarter, Tesla shipped just over 10,000 Model 3 cars a month to China.
However, the Y model will have to be offered with a cheaper option for Tesla to achieve this volume.
Tianfeng Securities analyzed the pricing of the Tesla Model 3 in the United States and the pricing of the Model Y in the United States to determine that Tesla could lower the price of the initial Model Y in China to just 275,000 yuan:
“Tianfeng Securities published a research report that in terms of Tesla’s pricing strategy, the price difference between the Model Y and the Model 3 is only 6-9%. Therefore, since the Model Y is mass-produced in China, Tesla is expected to continue to pursue a strategy to reduce prices. The entry price is expected to fall to 275,000 yuan. “
That’s roughly the equivalent of $ 41,000, or significantly less than the current starting price of the Model Y in the United States, but Tesla currently offers electric SUVs in only two trim levels.
A cheaper version with rear-wheel drive is expected to come soon.
Earlier this year, Tao Lin, vice president of Tesla China, said that the Model Y electric SUVs would leave the line at Gigafactory Shanghai in Q1 2021.
This seems like an optimistic look, but it’s not impossible because you can’t underestimate the small SUV / crossover segment in China.
Chinese EV startups like Nio and Xpeng have focused on it with their first electric vehicles and are doing very well.
I wouldn’t be surprised if Tesla does well in the Model Y segment as well.
But Tianfeng Securities is right, you will have to have a cheaper version.
Based on Tesla’s cost and pricing strategy with the Model 3 made in China, I don’t think that’s going to be a problem.
However, I think that 880,000 units in China for Tesla next year are too aggressive. If production starts at the beginning of the first quarter, it will not increase completely until the second half of the year.
Also, Tesla should expect Model Y sales to cannibalize a percentage of Model 3 sales in the country.
FTC: We use automatic income partnerships. More ▼.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.