7 December 2019

Tesla’s rumored entry-level model may take on BYD’s e6

Rumor has it that US carmaker Tesla Motors (TSLA.US) is moving at swift pace to develop the first entry-level version of its popular electric sedan.  

If the speculation turns out correct, the new model — dubbed variously as Model E or Model C — will be a trump card for Tesla to crack the Chinese market. According to news portal, the sleek coupe will be priced at US$35,000, roughly half the selling price of the firm’s current flagship upmarket Model S.

Tesla has built up its brand in the pure electric vehicle industry by occupying the luxury niche in the segment. By marketing its products as playthings for the deep-pocketed, the company has succeeded in creating a rare short supply in the sector, a stellar result that often made peers jealous.

A cheaper version of the chic brand is now likely to attract huge fans in China, particularly the style-conscious motorists.

Even inclusive of import duty and excise, the price tag on Model C in China is estimated to be at 344,000 yuan (US$56,541), more or less the same as the indigenously-developed e6, the flagship new energy car model of BYD Co. Ltd. (01211.HK).

Assuming that Model C and e6 are close in both price and performance, Tesla’s more stylish look and upmarket brand image could become a decisive factor in swaying buyers.

Despite a recent selloff in Tesla shares following a fire accident involving a Model S sports electric car in the US, the market capitalization of the Nasdaq-listed firm remains close to US$20 billion.

Such valuation is quite high as the green automaker is expected to deliver only 21,000 vehicles this year and as the company recorded its first ever profit only in the second quarter this year. Hopes of a successful foray into the mass market could provide the much-needed impetus to support the counter’s premium valuation.

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