EV maker Tesla (TSLA) is getting ready to launch a revamped Model Y car to try and beat off growing competition from local rivals in China.
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New Model Army
The company posted a picture of the six-seat sports utility vehicle on social media site Weibo this week, thundering: “Model Y L, see you in the fall!”
Reportedly a government approval document on the Chinese Ministry of Industry and Information Technology’s website states that the new Model Y will be larger than the current five-seat version and will have a top speed of 201 kilometers an hour.
The Model Y remains the best-selling SUV in China, which is its second biggest market. But the company, led by chief executive Elon Musk, continues to look nervously in its rear-view mirror at rivals including BYD (BYDDY) and Geely Automobile (GELYF).
Tesla’s China sales have suffered this year, falling month after month. However, Tesla recorded a 0.8% increase in June, delivering 71,599 units and breaking an eight-month losing streak. Meanwhile, deliveries of Tesla’s China-made Model 3 and Model Y autos surged 16.1% compared to May. These figures include vehicles sold both within China and exported to other markets.
Price is Right
The revamped Model Y should provide another boost as it fights off its rivals, but, according to analysts, its price point could be pivotal.
That’s because China’s car market has been dragged into a price war as companies compete to win over consumers who, hit by a sluggish economy, are reluctant to spend.
BYD triggered the latest round of price cuts earlier this year by slashing prices on its flagship models, prompting authorities to urge automakers to avoid a “toxic” pricing war.
Xiaomi (XIACF) launched its YU7 model in June, posing a direct threat to Tesla. It is priced at around $35,000, making it 4% cheaper than the Model Y.
Is TSLA a Good Stock to Buy Now?
On TipRanks, TSLA has a Hold consensus based on 13 Buy, 13 Hold and 8 Sell ratings. Its highest price target is $500. TSLA stock’s consensus price is $298.97, implying a 7.49% downside.
