Tesla Inc (NASDAQ: TSLA) The model Y electric vehicle will help boost sales and will emerge as a major destabilizer of that country’s automotive market in 2021, analysts estimate, as reported by Reuters on Monday.
What happened: China – the largest car market in the world – saw the launch of locally produced Y-sport utility vehicles this month for a price of RMB 339,900 ($ 52,376), which is less than a tenth of gasoline-powered luxury cars with a similar market positioning made of Daimler AG (OTC: DDAIF), Bayerische Motoren Werke AG (OTC: BMWYY) and Volkswagen AG (OTC: VWAGY), according to Reuters.
“The price will disrupt the conventional premium car market and put an end to the traditional belief that the cost of an electric vehicle (EV) should be higher,” said Cui Dongshu, secretary general of the China Passenger Car Association (CPCA).
See too: Tesla to Launch $ 25,000 EV Sedan in China by 2022: Report
Tesla’s model 3 sedan, which is made in Shanghai, outperformed cars in similar positions made by luxury automakers in November, according to CPCA data.
Why it matters: Tesla’s model Y price would set a benchmark for automakers to win and boost demand, Reuters noted.
The ongoing pandemic brought down sales of the New Energy Vehicle (NEV), which reportedly increased 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 project that NEV’s sales – which include battery-powered electric cars, plug-in hybrids and powered by hydrogen fuel cells – will grow 30-40%, to around 1.8 million of units this year.
The government’s extension of EV subsidies by two years will also boost demand this year, as Beijing wants NEVs to account for 20% of auto sales by 2025, instead of the current 5%, according to Reuters.
Rivalry Nio: Tesla, other foreign players, along with domestic competitors, such as Nio Inc (NYSE: NIO), Xpeng Inc (NYSE: XPEV) are increasing production to meet projected demand.
Nio unveiled its first sedan, the et7, during the Niño Day event on Saturday. The company’s CEO, William Li, said this week that the automaker could make cheaper cars for the mass market with a different brand.
Li clarified that the EV manufacturer does not see its new sedan competing directly with Tesla, but according to Automobility Ltd. CEO Bill Russo, Nio is well positioned to capture a considerable chunk of the Chinese EV market.
The price of et7 being “quite competitive with Tesla’s Model S” is a “statement of aspiration” by the automaker, Russo told CNBC on Monday.
Price action: Tesla shares closed nearly 7.8% lower at $ 811.19 on Monday and gained 0.9% in the after-hours session.
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