Tesla has begun rolling out locally made Model Y crossover vehicles in China, reaching an important milestone for the company. Tesla announced the news on Twitter. The post included photos of its Model Y SUV being purchased from a company showroom in China.
The Model Y is the second vehicle Tesla has manufactured and sold in China. Previously, they started deliveries of the Model 3 last Fall. Both lines of vehicle are being produced at the company’s sprawling Gigafactory in Shanghai, where manufacturing started in 2019.
The Model Y starts at 339,900 yuan (US$52,400) for the Long Range version. The Performance version starts at 369,900 yuan (US$57,000). Deliveries began Monday in select cities, including Shanghai, Hangzhou, and Wuhan. To help customers feel more comfortable, staff also packed a “virus prevention kit” in the new vehicles, including bottles of hand sanitizer.
Focusing On China
China has increasingly become a critical part of Tesla’s global strategy. Company CEO Elon Musk once called its Shanghai factory a “template for future growth.” In 2019, Tesla beat its own deadline to start producing cars in China. They kicked off trial production a mere ten months after breaking ground on the plant.
Tesla said that its initial goal for the Shanghai factory is to make 250,000 cars a year. They then hoped to ramp up to 500,000 vehicles annually. They announced they had hit their first goal back in October, while continuing to expand capacity.
Tesla was the first foreign automaker to be allowed to open a factory in the country without a Chinese partner. That has put pressure on domestic competitors like Nio. Tesla previously won a tax break for some of its cars, which helped make their prices more attractive to customers. The company also lowered the price of its Model 3 to qualify for government subsidies.
Upcoming Launch In India
The debut of the Chinese-made Model Y has been hotly anticipated. It’s being seen as another challenge to Chinese rival Nio, which sells its own line of electric SUVs. Tesla has recently leaned more heavily on its Chinese operations, including a decision last October to start exporting Chinese-made vehicles to Europe.
Tesla has also announced plans to push deeper into Asia, including a launch in India that is expected to happen later in 2021. Meanwhile, the Chinese auto market is predicted to become even more crucial in the coming years. By 2022, more than 40% of Tesla’s overall delivery sales could come from China, the company forecasts.