Elon Musk's Tesla Prepares For Major Model Y Overhaul In China Amid Rising Competition From Warren Buffett-Backed BYD And Xpeng: Report

In a bid to maintain its dominant position in the rapidly growing electric vehicle (EV) market, Tesla Inc TSLA is reportedly planning to debut an updated Model Y from its Shanghai plant. This move comes as a strategic response to the increasing competition from Warren Buffett-backed BYD BYDDF BYDDY.

What Happened: Elon Musk’s Tesla is getting ready for the production of the revamped Model Y sport utility vehicle in China, with mass production potentially starting in mid-2024, Bloomberg reported, citing sources.

The 2024 Model Y will feature more significant exterior and interior changes compared to the recent update in October. The first batch of new Model Ys will be produced in the second phase of Tesla's Shanghai plant, which will temporarily halt production for about a week during the New Year holidays for upgrades.

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Since its inception in 2019, Tesla's Shanghai factory has been responsible for over half of the automaker's global deliveries.

However, Tesla faces increasing competition from local rivals like BYD Co. and Xpeng Inc. XPEV, which are launching a range of new vehicles to gain a larger market share. In fact, BYD may even surpass Tesla in global fully electric car sales this quarter.

Why It Matters: The Model Y’s popularity in China is undeniable, with the vehicle being a significant contributor to Tesla‘s sales. Bloomberg Intelligence data shows that the Model Y makes up nearly 75% of Tesla’s total sales in China.

Meanwhile, Tesla decided to revamp its Model Y months after the company released a refreshed version, adding features such as black 19-inch Gemini wheels. The decision could be a strategic move to stay competitive and maintain its current market share in the face of these challenges.

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