Tesla Inc. on January 1st said it hasstarted taking orders for its China-made Model Y sport-utility vehicles (SUVs),with a 30 percent price markdown. The delivery to customers is set to startthis month, as the U.S. electric vehicle maker expands sales in the world'sbiggest car market.

According to its China website, thestarting price for Tesla Model Y's Long Range version, built in its Shanghaigigafactory, is set at 339,900 yuan ($52,000). Meanwhile, the sporty Model YPerformance will be sold from 369,900 yuan.

It is a lot cheaper and more affordablethan the 488,000 yuan quoted six months ago when presale orders first becameavailable for the January rollout.

By midday on January 1st, the order page onTesla China's website could not be refreshed due to a surge in visits, Tesla’scustomer support said on its micro-blogging Weibo account on Jan. 1st.

Tesladebuts lowest price Model Y SUV

Tesla has shaved 30 percent off the pricefor its China-produced Model Y SUV. It is forecast to fuel competition in thetraditional vehicle market rather than the new energy vehicle market, analystssaid.

At the end of December last year, TeslaVice President Tao Lin said the price of electric vehicles is related to thecost. The current goal of Tesla's localization rate has been basicallyachieved, and there is no possibility of further price reductions in thefuture, he said.

Model Y does 594 kilometers, or 369 miles,on a single charge, with a claimed top speed of 217 kilometers per hour. China,which offers hefty subsidies for electric vehicles as it seeks to cut down onpollution from petrol- and diesel-fueled cars, is key to Tesla's globalstrategy.

With the massive markdown from the pricequoted six months ago when presale began, the Model Y will sell from 339,900yuan ($52,000). This excludes a government subsidy to encourage customers toreplace their gas guzzlers for NEVs.

So far, Tesla’s gigafactory in Shanghai,which opened a year ago, has only been rolling out Model 3 vehicles. The ModelY, which is a bigger, more luxurious version of the Model 3, is expected to bemuch more popular, Chief Executive Officer Elon Musk said previously.

Tesla sold 113,600 units of the Model 3 inChina in the first 11 months last year, according to the CPCA. This is expectedto more than double to 300,000 vehicles this year, it said.

It is expanding its Shanghai car factory,where it also builds its Model 3 sedans. In October, it started exporting Model3 vehicles to Europe.

It is also adding manufacturing capacityfor EV chargers in Shanghai and expanding its sales and service network aroundthe country. It sold over 20,000 vehicles in November.

Sports utility vehicles are very popular inChina and the Model Y should have better sales than the Model 3 sedan, said CuiDongshu, secretary-general of the China Passenger Car Association.

Teslaslashes prices－rivals willfeel the cost

"Tesla's competitors, of course, aretraditional car companies like Volkswagen," Xue Xu, an associate professorof economics at Peking University, told the Economic Daily.

Traditional carmakers, with large(operational) scale, have few barriers to introducing new technologies such aselectrification and autonomous driving. Although the NEV startups have raisedlarge sums of money, they face difficulties in development under the pressureof many big brands, Xue added.

"Tesla's frequent price cuts in Chinareflect that it is poised to expand its scale to pursue efficiency," Xuesaid.

Tesla's rivals in China include VolkswagenAG and BMW as well as local startups such as Nio Inc., Xpeng Inc. and Li AutoInc., which all have electric SUV models.

In the first 11 months of 2020, Tesla'sChina sales stood at 111,600 vehicles. Meanwhile, Nio Inc. sold 37,000, Li Auto26,000, Xpeng Inc. 21,000 and Weltmeister 20,000 units, according to the ChinaPassenger Car Association.

Tesla's Shanghai Gigafactory is expected toreach an annual production capacity of 550,000 vehicles this year.

The Model Y and Model 3, Tesla'sbestselling model, share the same platform and electric motor, which is in linewith the development model of traditional car companies.

Nio founder and CEO William Li said theModel Y will hit traditional automotive products first, not Nio.

Many people who were thinking of buying atraditional carmaker's NEV or fossil-fuel vehicle will be attracted by Tesla'sprice cut, according to Li.

The relationship between Tesla and ChineseNEV startups is not a zero-sum game. They are not only competitors, butcomrades-in-arms. This is according to an automobile industry researchinstitute affiliated to the China International Capital Corporation, aninvestment bank.

Cui Dongshu, secretary-general of the ChinaPassenger Car Association, shared a similar view. He said that the main effectof the Model Y's price reduction will be felt in the traditional car market.

The price cut will help stimulate theenthusiasm of luxury car buyers, who are inclined to choose SUVs fromtraditional automakers like BMW, Mercedes-Benz and Audi.

As their products have the advantage ofdifferentiation, NEV startups will not be affected too much by Tesla's pricereduction. But it is expected to make the electric car market bigger togetherwith the United States' electric carmaker, Cui added.

Data show that in 2020, Tesla delivered499,550 vehicles globally, 11 times that of Nio, 15 times that of Lixiang and18 time that of Xpeng. The three are top electric vehicle startups in China.

Tesla2020 deliveries beat estimates, but fall short of target

2020 was a very good year for Tesla. Itsstock price gained more than eight-fold, boosted by its inclusion in Standard& Poor’s 500 Index in December.

The electric car maker closed the year 1.57percent higher on the last day of trading on Dec. 31 at USD 705.67 with amarket valuation of USD 668.9 billion. It has achieved profit for fiveconsecutive quarters.

Tesla Inc. on January 2nd reportedbetter-than-expected 2020 vehicle deliveries but narrowly missed its ambitiousfull-year goal during a punishing year for the global auto industry.

The company delivered 499,550 vehiclesduring 2020, above Wall Street estimates of 481,261 vehicles, according toRefinitiv data, but 450 units shy of CEO Elon Musk's target.

It came just shy of its annual deliverytarget of half a million vehicles but allowing for a 0.5 percent fluctuation infinal delivery figures, it might actually have achieved its full year goal, itadded.

Musk tweeted he was "proud of theTesla team for achieving this major milestone." "At the start ofTesla, I thought we had (optimistically) a 10 percent chance of surviving atall," he said.

Tesla's share price has risen more than 700percent over the last year, the company has reported five consecutive quarterlyprofits, and it was included in the S&P 500 index in December.

But some online investor accountscriticized Tesla for saying it had achieved its guidance.

Tesla at the start of 2020 said it would"comfortably exceed 500,000 units" for the year, a target it has leftunchanged despite the pandemic. Chief Financial Officer Zachary Kirkhorn inOctober said Tesla was "aiming to achieve (its) original 2020guidance."

Tesla has pinned hopes on new markets suchas Europe and Asia, with competition intensifying in its home turf as legacyautomakers double down on their investments in the booming EV space.

Tesla's delivery push has been supported byits new Shanghai factory, the only plant currently producing vehicles outsideCalifornia. The carmaker said Model Y production in Shanghai has begun, withdeliveries expected shortly.

California-based Tesla said it delivered180,570 vehicles during the fourth quarter, a quarterly record for the electriccarmaker, beating estimates of 163,628 vehicles.