Customers inquire and try out a Model Y car displayed at a Tesla store in Shanghai. Photo: Yang Hui/GT

The ripple effect of Tesla's surprising price reduction for the Chinese-made Model Y cars has continued, with market attention focused on the future competitive landscape created by the foreign player that has stirred up the new-energy vehicle (NEV) market in China.

Tesla's price cut will mainly have an impact on the traditional luxury brands such as Benz, BMW and Audi, whose sport utility vehicle (SUV) models have sold well in the Chinese market, experts said. But rising domestic NEV players such as NIO, XPeng and Li Auto, generally called the "new force" in challenging Tesla, will face less pressure.

In a Tesla store at the HKRI Taikoo Hui shopping square at Shanghai, a sapphire-colored Model Y was displayed in the store along with two Model 3s and one Model S. At about 2 pm on Tuesday, a steady flow of customers came in to inquire the basics of the model. There was hardly a moment when the car was ignored, while the two Model 3s had a lot of idle time.

One female customer ordered a Model Y vehicle after she and her child sat inside the car for a while and listened to an introduction by the salesperson. 

"Maybe I'm wrong, but I think domestic NEVs can't do as well as Tesla in hardware techniques and performance. I also like its appearance, and it's very spacious," she said. 

Another selling point: she could get a free car license (for NEVs) and because she learned from friends that the Model Y's price had been cut. She's buying the car for herself, while her husband owns a traditional vehicle.

A male customer said he dropped in to have a look at the Model Y, and is still weighing whether to choose it or a NIO car. "My first car is a BMW, and I am considering buying an electric car for a change."

"But if it's my first time buying a car, I will still choose a traditional vehicle." He said that he thought the NIO is better in terms of its interior design, but the Model Y is attractive for its cheaper price. 

Tesla on Friday released the Model Y series in the Chinese market. There are two versions ranging in price from 339,900 yuan ($52,028) to 369,900 yuan. The performance version had been previously expected to cost 535,000 yuan while the long-range version was to cost 488,000 yuan, according to sina.com.

The Global Times talked to two salespersons in the store, but they both said they couldn't disclose the exact sales number. One salesperson said that sales have "exploded" and she has been "super busy" recent days.

According to her, the store was packed with customers when the car was first displayed on Saturday. 

A few days ago, Tesla still could promise customers that they could get the car delivered before February 28, after which point the Shanghai municipal government is likely to change its policy of issuing NEV car license plates for free, but the company doesn't make such promises now as sales have been hotter than expected, the person said.  

The second salesperson said that a customer could get a car delivered in about two months if the order was placed right now.

Chinese consumers who originally placed orders with NIO and other brands of the "new force" are reportedly cancelling those orders and shifting them to the Model Y.

NIO swiftly denied the report. Qin Lihong, co-founder and president of NIO, said on Sunday that the company's orders are steady and increasing.

CEO of XPeng Motors He Xiaopeng said the company remains confident in the face of Model Y's price reduction. "We did not even bother to hold a teleconference. Data has also fully proved that price reductions are just a marketing method, and that's definitely a double-edged sword."

Official data showed that in the fourth quarter of 2020, NIO delivered 17,353 units, a year-on-year increase of 111 percent, exceeding the upper limit of the previous financial report's guidance. In December, XPeng's total delivery volume was 5,700 units, a record high.

Shares of the top three "new force" players rose against market expectations in the US, with NIO up 9.75 percent, XPeng up 2.97 percent, and Li Auto up 12.59 percent.

Cui Dongshu, the secretary general of the China Passenger Car Association, said that rising Tesla challengers have their unique features and they have cultivated users who have high brand loyalty, so the Model Y's price cut will not deal a blow to them.

"The changes will take place in the traditional auto market where the internal combustion engine is dominant. Luxury SUV manufacturers will face mounting pressure in this regard," Cui noted.