Tesla is gearing up to revamp its Model Y for the Chinese market, aiming to regain lost market share and take on competitors like Li Auto and Nio. According to a report from SCMP, the US electric vehicle (EV) maker plans to introduce a six-seat variant of the Model Y, assembled at its Shanghai Gigafactory next year.

This move is part of a broader strategy to fine-tune its product mix and expand its customer base in the world’s largest automotive market.

Tesla’s Market Share Slip

Tesla has been facing stiff competition in China, with its market share in the premium EV segment dropping significantly. The company has lost more than half of its market share amid intense competition and price cuts from rivals.

“Tesla has to step out of its comfort zone now that several carmakers have introduced models to challenge its bestselling Model Y,” said Zhao Zhen, a sales director at Shanghai-based dealer Wan Zhuo Auto.

The Six-Seat Model Y

The current Model Y in China is configured with five seats in two rows, while the refreshed North American version offers seven seats, with two smaller seats in the third row. The new six-seat configuration for the China-only market aims to balance capacity with spaciousness, featuring two seats in each of the three rows and a collapsible middle seat in the second row for easier access.

Competition from Li Auto and Others

The revamped Model Y is expected to compete with Li Auto’s L8 and L9, large-size SUVs that have proven popular among wealthy families in China. Li Auto sold about 95,000 L8 and L9 models in the first seven months of this year. Other competitors include Nio’s Onvo L60, Geely Automobile’s Zeekr 7X, and IM Motors’s LS6, all of which offer competitive pricing and advanced features.

Tesla’s Current Standing

Despite the competition, the Shanghai-made Model Y remains China’s bestselling midsize SUV, with a starting price of 249,900 yuan (US$35,113) and a range of up to 554km on a single charge. However, younger Chinese consumers are increasingly viewing Tesla’s models as aging, with local brands offering more advanced digital technologies and longer driving ranges at lower prices.

EVXL’s Take

The introduction of a six-seat Model Y in China underscores Tesla’s commitment to adapting to local market preferences and intensifying competition. As the EV market continues to evolve, established players like Tesla must innovate to stay ahead. This move aligns with Tesla’s broader strategy to maintain its leadership in the EV sector, as seen in recent developments covered in our Tesla category. For a broader perspective on the competitive landscape, check out our articles on Lucid and GM.

Recent Developments

While Tesla’s plans for a six-seat Model Y in China are taking shape, recent reports suggest that the company is also making moves in other markets.

According to our latest article, Tesla has extended its attractive 1.99% financing offer on new Model 3 and Model Y orders in the United States, removing the previous order deadline. This move could make Tesla’s EVs more financially accessible to a broader range of consumers, potentially boosting sales in the competitive US market.

Additionally, our recent coverage of Model Y refresh rumors highlights the ongoing speculation about potential updates to the popular EV. While Tesla CEO Elon Musk has stated that no Model Y refresh is coming out this year, the company continues to make incremental improvements to its vehicles.

These developments, combined with the planned six-seat variant for China, demonstrate Tesla’s commitment to adapting its products to meet diverse market demands and maintain its competitive edge in the global EV landscape.