Tesla launches cheaper Model Y in China to take advantage of government cash subsidy for buyers

New standard range Model Y will cost 276,000 yuan after subsidy, about 20 per cent cheaper than the long range version

Tesla will maintain its leading position in China despite facing concerns about quality and safety, industry observer says

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Elon Musk at the unveiling of the Model Y at Tesla’s design studio in Hawthorne, California, in this file photo from March 14, 2019. The new model launched in China was dropped by Tesla in the US last year after Musk said that its range was ‘unacceptably low’. Photo: AP

Published: 4:00pm, 9 Jul 2021Updated: 4:00pm, 9 Jul 2021

US carmaker Tesla has started selling a cheaper Model Y SUV with a shorter driving range to take advantage of a government subsidy scheme.

A standard range Model Y will cost 276,000 yuan (US$42,553) after a subsidy that lowers its price by more than 20 per cent compared with the long range version, according to Tesla’s Chinese website. Beijing offers cash subsidies to buyers of electric vehicles (EVs) priced below 300,000 yuan. The long range Model Y, which has a range of 594km and costs 347,900 yuan, does not qualify for this subsidy.

“The new version, with a relatively lower driving range, can save buyers 20 per cent and is set to attract lots of new customers,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. “Tesla will maintain its leading position in China, although it has some thorny issues to deal with.”

The carmaker is the front runner in China’s premium electric vehicles (EVs) segment, where it must compete with the likes of home-grown start-ups NIO, Xpeng and Li Auto. But it faces growing suspicion about the quality and safety of its Shanghai-made cars. Last month, it recalled more than 285,000 of these cars because of safety concerns about their cruise control function. The recall involves nearly all cars assembled at its Shanghai plant since it became operational at the end of 2019. It has since apologised for causing inconvenience to its customers.

The recall also follows a series of incidents that have dented Tesla’s reputation in China in recent months. In March, the Chinese military banned Teslas from its facilities because of concerns about cameras installed in the cars. In April, under pressure from Chinese regulators, the carmaker released the data log of a Model 3 that crashed in February in the country’s central Henan province to the car owner. The owner, identified as Zhang Yazhou, had jumped atop a Model 3 on display at the Shanghai Auto Show 2021 on April 19 to protest against Tesla, causing much embarrassment to the company.

The new model launched in China was dropped by Tesla in the US last year after CEO Elon Musk said that its range was “unacceptably low”. The cheaper standard range version also uses Chinese battery maker CATL’s lithium iron phosphate batteries.