In a move that will plant it more firmly in the Chinese automobile market, Tesla (TSLA) has been granted permission to start selling its Model Y SUV in China, according to China’s Ministry of Industry and Information Technology.
Tesla, which has been producing and selling its Model 3 electric sedan in China from its Shanghai factory since December 2019, sold more than 13,000 vehicles in the communist country in October, Reuters said.
The electric automaker also has plans to manufacture the Model Y at its Shanghai facility, where it applied for permission to sell the vehicle earlier this month. Tesla has been preparing for the last 10 months to produce the Model Y in Shanghai, nearly doubling the size of the facility over that time, Electrek reported.
Led by CEO Elon Musk, who is now the second richest person in the world with a net worth of $142 billion, according to the Bloomberg Billionaires Index, Tesla's venture into enter the Chinese market with the electric SUV could significantly add to Tesla’s overall delivery makeup.
Daniel Ives, a Wedbush Securities analyst, told Yahoo Finance that with the addition of the SUV, Tesla’s Chinese delivers could represent 40% of the automaker’s overall deliveries in 2022. Ives added that Tesla could double it sales in China over the next few years as it competes against Chinese electric car rivals BYD, Nio, Xpeng, and Li Auto that are also “firing on all cylinders.”
Adding to the call to expand operations in China is an electric car initiative by the Chinese government that is offering a tax exemption for Tesla’s Model’s Y, naming it in its 12th batch of recommended “new energy vehicles.”
Beyond the Model Y production and deliveries, Tesla also has plans to produce electric car chargers in China in 2021, making an investment of $6.4 million in a new charging-station factory in the country, Yahoo Finance said.
Production of the Model Y is expected to start in China any day now and ramp up to increase volume in the coming months. Deliveries within the country are slated for early 2021, Electrek reported.
Led by CEO Elon Musk, who is now the second richest person in the world with a net worth of $142 billion, according to the Bloomberg Billionaires Index, shares of Tesla were trading at $599.00 at premarket open, up $13.24 or 2.26%.
Tesla will now export cars made at its factory in Shanghai to Europe Photo: AFP / Emmanuel DUNAND