A Tesla Model 3 on display in Shanghai  Photo: Xie Jun/GT

US new energy vehicle (NEV) maker Tesla's full-swing operation in China will be an opportunity for the domestic NEV industry in the long term, a Chinese official said. The comments came in response to Tesla's reported plan to further cut the prices of its Shanghai-made Model 3 next year, which could place massive pressure on domestic rivals.

Though the mass production and reducing prices of Tesla's China-made series would cast a shadow on home brands, it could also force them to enhance their technical innovation and speed up strategy upgrades, Minister of Industry and Information Technology Miao Wei said at a press conference in Beijing on Monday.

As the first wholly foreign-owned enterprise in China's NEV sector, the rapid completion of Tesla's Gigafactory in Shanghai has demonstrated China's determination to create an international business environment and promote a new round of opening-up, Miao stated.

Haven broken ground in January 2019, it took Tesla's Gigafactory just one year to deliver its first batch of vehicles on December 30.

The mass production and falling prices of Tesla's Shanghai-made vehicles could bring greater benefits to Chinese consumers, Miao said.

In December, Tesla's Model 3 was included in a government list of NEVs exempted from vehicle purchase tax by the Ministry of Industry and Information Technology.

Amid a favorable environment, Tesla has attached great importance to its development in the Chinese market. "We'll continue to make significant investments in China, making the Model 3, the Model Y and future models as well in China," Tesla CEO Elon Musk said in Shanghai on January 7.

According to Tesla's official account on China's Twitter-like social media platform Weibo, the company has switched its mapping data provider to China's tech giant Baidu, and has been recruiting talent to establish a research and development center in China.

Li Bin, founder and CEO of NIO, a representative domestic rival of Tesla, said at a forum on January 11 that NIO will not lower its prices in response to Tesla's price cut, but will strive to offer better services to customers.

After a year of gloomy development in China's auto industry, Miao said that China will actively guide auto producers to speed up innovation, enhance brand cultivation and shore up their competitive abilities.