Tesla Model Y is receiving strong interest from the Chinese market following its launch, according to local reports, and it is putting pressure on the competition in an important segment.

Tesla Model Y in China

As we previously reported, Tesla is using 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 nine months, Tesla has been expanding Gigafactory Shanghai to prepare for the production of the electric SUV.

The plant has more than doubled in size.

In October, Tesla released new pictures of the upcoming Model Y Shanghai factory

In November, the automaker also obtained approval for Model Y made in China from the Ministry of Industry & Information Technology.

Finally, Tesla started production of the Model Y at Gigafactory Shanghai over the last few weeks and just last week, the automaker updated the online configurator with the production version – confirming that deliveries will start this month.

With the launch in the Chinese market, Tesla also updated the price of the electric SUV, which now starts at 339,900 yuan ($52,000) for the Long Range Dual Motor version and the Model Y Performance version will start at 369,900 yuan ($56,600).

Model Y makes a splash in the Chinese market

Several local Chinese media outlets are reporting that the start of production and lower-than-expected price have attracted a lot of customers already.

Tesla stores with the Model Y in display were flooded by potential buyers over the weekend.

Gao Shen, an analyst of manufacturing industries in Shanghai, told the South China Morning Post:

“Competition in the premium electric vehicle segment is set to escalate now that Model Y is showing signs of grabbing a big market share. Tesla’s rivals have to take action to fight back to maintain their share.”

The Model Y is stepping into the heart of the booming EV startup scene in China with the biggest companies, Nio, Xpeng, and Li Auto all having small electric SUVs.

The segment is fast-growing and adding the Model Y to the mix is going to be interesting.

Following the launch of the Model Y last week, some buyers are already changing their minds according to local reports:

“Local media reported that some drivers who previously ordered cars by Tesla challengers – NIO, Xpeng and Li Auto – have reneged on their contracts and were looking to buy Model Y.”

Though those reports are only anecdotal and we will have to wait until later this year to have a better idea of Model Y’s impact on the market

Tesla Model Y Production in China

The launch of Model 3 production in China was quite remarkable. Deliveries started in January 2020, only a year after starting construction of the factory in Shanghai, and the electric sedan quickly became the best-selling electric vehicle in the country.

A similar situation could happen with Model Y, which just now started production, but Tesla seems to be ramping up rather quickly.

A new drone flyover of the factory last week shows already hundreds of Model Y vehicles in the parking lot of the factory getting ready to be shipped:

The planned production capacity is unknown, but it is expected to be over 200,000 units per year at full production.

Though Tesla could also lower Model 3 output at Gigafactory Shanghai to support Model Y production.

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