(Yicai Global) July 9 -- Tesla’s unveiling of a less-expensive version of its locally produced Model Y sports utility vehicle in China is expected to have a knock-on effect on similarly priced vehicles made by Chinese electric carmakers such as BYD and Xpeng.

At CNY300,000 (USD46,280), the starting price of the standard-range Model Y will impact the new energy vehicle models of BYD, Xpeng, Arcfox, Seres, and Volkswagen ID that are within the same price range, according to auto dealership analyst Li Yanwei. The cheaper model will boost sales and squeeze out rivals, he said.

The standard-range Model Y now has a sticker price of CNY276,000, CNY70,000 below the longer-range version released in January, Tesla China posted on its website yesterday. The standard model uses lithium iron phosphate batteries from Contemporary Amperex Technology, which cost about 20 percent less than ternary lithium batteries.

The US electric car giant’s brand positioning seems to be giving up on the high-end market, Li added.

Tesla’s own Model 3 will be the first to be affected by the cheaper Model Y. As an SUV with more space, the Model Y’s starting price is just CNY25,100 more than its Model 3, and its range is 57 kilometers longer than the upgraded standard-range Model 3.

With the Model Y priced below CNY280,000, the Model 3 will have room for a price drop of about CNY20,000, or improvements in configuration performance, Yi Ran, a partner at Jielanlu Consulting and long-time NEV market watcher, told Yicai Global. “It’s highly likely the price will be further reduced,” he said.

Tesla delivered nearly 140,000 vehicles in China in the first five months of this year, accounting for nearly 15 percent of the total 950,000 NEV vehicles delivered in the country, according to data from the China Passenger Car Association.

Editor: Futura Costaglione