Tesla’s Chinese team is spearheading the development of a lower-priced Model Y to counter intensifying competition in the local market, according to a report by Chinese media outlet 36kr.
The new variant will retain the battery, powertrain, and chassis of the existing Model Y while streamlining configurations through Tesla’s “depop” development process, which enables rapid product launches while preserving core features, the report said, citing industry sources. Instead of an English name, the project is assigned a code comprising letters and numbers.
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The launch timing for the lower-cost Model Y will depend on sales performance of the updated Model Y, which Tesla introduced in China on January 10. If demand for the refreshed version does not meet expectations, the company could release the lower-priced model later this year, the report noted.
Tesla China began selling the new Model Y on March 1, following the limited-time sale of a “Launch Series” variant, which had included a promotional extended warranty. The standard version retains the same pricing: RMB 263,500 ($36,360) for the rear-wheel-drive variant and RMB 303,500 for the long-range all-wheel-drive version.
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However, initial sales figures suggest market reception has been tepid. While Tesla sales representatives cited 200,000 orders as of early March, a significant portion were refundable, and early delivery figures were lower than previous Model Y launch cycles, according to 36kr.
Tesla’s domestic sales in China fell to 26,777 units in February, an 11.2% decline year-on-year and down 20.6% from January, data from the China Passenger Car Association (CPCA) showed. The report attributed the decline to weakening product competitiveness and suggested Tesla may need to either improve product features or lower prices.
China remains Tesla’s most crucial market, and a more affordable Model Y could serve as a key strategy to regain momentum, 36kr reported.