Tesla (TSLA) has secured tax exemptions for “new energy vehicles” in China for its upcoming new Model Y made at Gigafactory Shanghai.

It’s one of the last steps before the electric SUV can be delivered to customers in the country.

As we previously reported, Tesla has taken a new vehicle introduction strategy for Model Y. Unlike previous vehicle programs, which were launched in different markets with vehicles imported from Tesla’s Fremont factory in California, Tesla is only introducing Model Y in new markets once the vehicle is being produced there.

For the past 10 months, Tesla has been expanding Gigafactory Shanghai to prepare for the production of the electric SUV.

The plant has more than doubled in size.

Last month, Tesla released new pictures of the upcoming Model Y Shanghai factory

Earlier this month, the Chinese Ministry of Industry & Information Technology registered the made-in-China Model Y.

Now the ministry has included the Tesla Model Y in its 12th batch of recommended “new energy vehicles” – making the electric SUV eligible for electric vehicle incentives, including tax exemptions, in the country.

This is among the last steps for Tesla to start producing and selling the Model Y in China.

A camouflaged prototype Model Y was even spotted being tested at Gigafactory Shanghai last week as the automaker is gearing up to start production:

Tesla has been guiding a start of production and deliveries of the Model Y in China in “early 2021.”

Production is expected to start any day and ramp to higher volumes in the coming months for deliveries in Q1 2021.

The hype around the Model Y in China is high, and the vehicle is expected to make a big impact in the small SUV/crossover segment, which is hugely popular in China.

Startups like Nio and Xpeng have been quick to address it with their own first electric vehicles.

Last month, an analyst of the auto market in China estimated that Tesla could sell as many as 30,000 Model Y vehicles per month once the cheaper version of the electric SUV is available.

That’s about three times bigger than Tesla’s Model 3 sales, which is already dominating the electric vehicle market in the country.

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