Electric-car maker Xpeng shrugs off concerns Tesla’s steeply discounted Model Y will win over mainland Chinese drivers

On New Year’s Day, Tesla announced that the long-range version of its Model Y would start from 339,900 yuan (US$52,588), down from 488,000 yuan six months ago when presale orders could first be placed.

The Performance version is now priced at 369,900 yuan, down 31 per cent from presale.

Tesla did not unveil sales data for Model Ys assembled at its Gigafactory 3 in Lingang, Shanghai, but anecdotal evidence suggests the global EV leader has drawn a massive number of orders from mainland customers.

Yale Zhang, managing director of Automotive Foresight, an industry researcher in Shanghai, said at the end of 2020 that further price cuts to the Model 3 and Model Y could deal a blow to Chinese start-ups because mainland drivers would choose Tesla, an established brand, as it becomes more affordable.

Buyers of the second locally built Tesla model will have to wait until late February for deliveries to start, according to staff at a company showroom on Shibo Avenue in Pudong, Shanghai.

The first batch of Model Y units are expected to be delivered to buyers this month, Tesla said on its China website.

“Chinese EV start-ups are set to face a hiccup in the near term,” said Eric Han, senior manager at business advisory firm Shanghai Suolei. “Model Y will attract a bigger volume of eyeballs in the coming weeks or months, but Tesla rivals will fine-tune pricing or marketing strategies to enhance their competitiveness.”

The mainland’s top EV start-ups reported sizzling sales in the fourth quarter of 2020, the latest sign that environmentally-friendly cars were increasingly well received by young Chinese drivers.

Xpeng delivered a record 5,700 vehicles in December, up 326 per cent from a year earlier. They comprised a record 3,691 P7 sports sedans and 2,009 G3 compact SUVs.

Shares of Xpeng opened up 6 per cent, and NIO rose more than 5 per cent in the US on Monday.

The buoyant sales came after Tesla cut the price of the Model 3, its first EV made in Shanghai, by 8 per cent. The car is now available to mainland Chinese customers for 249,900 yuan (US$38,670).

“The lower price boosted sales of Model 3 [in the fourth quarter], but did not dent deliveries of the Chinese rivals as expected,” said Peter Chen, an engineer with car component maker TRW. “The sales data added to evidence that the fast-growing mainland EV market was big enough to lure more players.”

Xpeng’s P7 starts from 229,900 yuan after state subsidies. Li Auto’s One SUV sells for 328,000 yuan, while Nio’s ES6 SUV starts at 346,600 yuan.

Xpeng vice-president Wu Xinzhou said in October that the carmaker would focus on making driving “more fun” for customers by incrementally improving the smart features of its vehicles.