Tesla has launched a fresh Model Y to take on its domestic rivals in China

Tesla announced a facelifted version of its popular Model Y in China on Friday, as the US electric car giant looks to fend off challenges from domestic rivals.

The Model Y will start at 263,500 Chinese yuan ($35,935), with deliveries starting in March. That’s 5.4% more expensive than the previous Model Y’s starting price.

A Tesla China spokesperson said the new Model Y is only open for pre-sale in the Chinese market, rather than being launched globally.

Tesla’s Model Y refresh comes after the auto giant announced its own this month First annual decline in overall shipments by 2024.

Elon Musk’s electric vehicle company faces stiff competition globally from European startups and traditional automakers. In China, the company continues to face the onslaught of rivals BYD to new players like xpeng and I.

Jason Low, a senior analyst at Canalys, noted that the Tesla Model Y was the best-selling electric vehicle in China in 2024 and that the car’s popularity “remains strong.” However, he noted that competition in the sports utility vehicle (SUV) segment, with vehicles priced between 250,000 yuan and 350,000 yuan, has been “fierce”.

“Tesla needs to demonstrate attractive smart features, especially a unique but well-positioned ecosystem of cabins and services,” as well as “effective” semi-autonomous driver assistance features “to ensure competitiveness in the market,” Lowe added.

Tesla is offering several incentives for customers to purchase the Model Y, including a five-year 0% interest financing plan.

The new Model Y can accelerate from 0 kilometers per hour to 100 kilometers per hour in 4.3 seconds, Tesla said, surpassing the speed capabilities of the previous vehicle. Model Y Long Range has more driving range on a single charge than its predecessor.

Tesla hasn’t introduced a new model since the Cybertruck began deliveries in late 2023, starting at nearly $80,000.

Investors have been eager for a new mass-market model to reinvigorate sales. Tesla has previously indicated that a new affordable model could be launched in the first half of 2025.

Despite Tesla’s headwinds, the company’s shares have risen nearly 70% in the past 12 months, in part due to CEO Musk’s close relationship with US President-elect Donald Trump.