The move would connect Tesla’s biggest and most
cost-efficient factory in the world to North America, its largest market. The
Model Y is the electric vehicle (EV) maker’s bestselling model globally.
Over the weekend, Tesla posted on its website that it would
offer a new, cheaper version of its Model Y in Canada, a rear-wheel drive
variant of the SUV-styled crossover priced C$10,000 ($7,377.90) lower than the
long-range version of the vehicle available in that market.
Tesla’s website showed that customers in Canada could take
delivery of the new version of the Model Y between May and July.
The Canadian government’s website was updated on Friday to
show that the new version of the Model Y and the more expensive long-range
variant both qualify for incentives of C$5,000 on purchase or a four-year
lease. Tesla Shanghai began production of the Canada-bound version of Model Y
earlier this month, the source said. The production memo reviewed by Reuters
showed that vehicles had been designed and tested for export to North America,
with a target of producing nearly 9,000 this quarter.
Reuters reported in November that Tesla had considered plans
for exporting made-in-China vehicles to North America. After the Reuters report
was published, Tesla CEO Elon Musk, in a Twitter post, had said “False”,
without elaborating. Musk told analysts last week that Tesla’s Shanghai plant
had the “lowest cost structure” of any of its factories. Canada’s transport
agency’s EV incentive programme mandates that a base model for an SUV has to be
under C$60,000 to qualify for the subsidy of up to C$5,000. Higher cost
variants are then also eligible at a price of up to C$70,000.
The introduction of the cheaper Model Y for Canada qualified
both it and Tesla’s C$69,900 long-range Model Y for the incentive as of Friday,
Transport Canada said on its website.
Tesla’s Shanghai plant uses lithium-iron phosphate (LFP)
batteries for the Model Y version produced there for sale in China and for
export to Europe and other markets. At its factories in Texas and California,
Tesla has been rolling out a more powerful battery configuration known as 4680.
Tesla’s website shows the new, Canada-specific version of
the Model Y has an EPA-rated range equivalent to 245 miles (394km) on a charge.
The US version of the entry-level Model Y, which has all-wheel drive, has an
EPA-rated range of 279 miles. The new Model Y for Canada is also cheaper than
the entry-level US model – US$44,275 versus the current price of US$46,990 for
the US.
Tesla has cut US prices on Model Y variants three times
since the start of the year, part of a discounting strategy to drive volume
that sliced into its first quarter margin and touched off a price war on EVs.
It shipped more than 271,000 Model Y and Model 3 sedans from
its Shanghai factory last year to Europe and other markets, roughly a fifth of
its global sales.
Tesla is not alone in exporting EVs from China. Renault
exports the Spring, an entry-level hatchback EV to Europe under its Dacia
brand. BMW exports the iX3 from China to Southeast Asia and Europe.
China’s overall car exports grew fourfold between 2020 and
2022 to top 2 million vehicles and are on track to top 3e million this year if
the first-quarter pace is sustained.