Can the extended Model Y help Tesla win back the Chinese market again?

Launching "L" models with extended wheelbases has been a tried-and-true competitive strategy for foreign automakers in China, and this time it's Tesla's turn.

Whether it's Audi, BMW, Mercedes-Benz, or automakers from Japan, South Korea, or France, they've all adopted this approach. Tesla, which denied rumors of a six-seater model last year, announced on July 16 that the Model Y L will be launched in the third quarter. The model will make its debut in China and will also be available in overseas markets.

According to the new vehicle product publicity list in the "Announcement of Road Motor Vehicle Manufacturers and Products" (Batch 397) released by the Ministry of Industry and Information Technology, the Model Y L is a six-seater model with a length, width, and height of 4,976 * 1,920 * 1,668 millimeters respectively, and a wheelbase of 3,040 millimeters. Compared with the rear-wheel-drive version of the 2025 Model Y, the length has increased by 179 millimeters, the height by 44 millimeters, and the wheelbase by 150 millimeters. The new car is equipped with front and rear dual motors, with a maximum power of 142 kilowatts for the front motor and 198 kilowatts for the rear motor, showing an improvement in power performance.

As soon as the news of the Model Y L came out, at the close of the U.S. stock market on July 16, Tesla's stock price climbed 3.50%, with a trading volume of $30.728 billion, making it the top-traded stock on the U.S. stock market that day.

Tesla's new moves in China have restored some confidence in the market. The Chinese market is one of the few major markets where Tesla is still experiencing positive growth. However, due to the strong rise of Chinese new energy vehicle brands, Tesla's share in China is shrinking. In the first half of the year, Tesla's market share in China dropped to 7.6%, compared with 15% in 2020.

Tesla's Model Y used to top the list of passenger cars in China for many years and was the target pursued by many Chinese automakers, especially new energy brands. Brands such as Xiaomi, LeDao, Zeekr, Lynk & Co, ZEEKR, and Avatr have publicly targeted and even challenged to surpass the Tesla Model Y in different dimensions of their products.

Last year, Yu Chengdong said at the launch of the ZEEKR R7, "Tesla Model Y is a very successful product in the pure-electric SUV market and is also very excellent. The goal of the ZEEKR R7 is to be better than the Model Y and compete with the Model Y at a higher level with specifications surpassing the Tesla Model X."

At the launch of the XPeng G7 in July this year, the chairman of XPeng Motors compared the space parameters of the XPeng G7 with those of the Tesla Model Y, claiming that except for the frunk, the XPeng G7 "leads comprehensively" in terms of space. Models such as the Xiaomi YU7, LeDao L60, Zeekr 7X, and Leapmotor C11 have also been publicly compared with the Model Y.

According to data from Autohome, the Model Y sold 171,491 units in the past six months, ranking third in the Chinese market. The top two were the cost-effective small cars Geely Xingyuan and BYD Seagull. Looking at the monthly sales in the first half of the year, the Model Y returned to the top of the monthly sales list of passenger cars in China in March and June. In the remaining months, the Xiaomi SU7, with a similar price range, surpassed the Model Y three times.

The rapid catch-up of Chinese automakers, who sometimes even outperform Tesla, has forced Tesla to make changes in the Chinese market. Before the Model Y L, Tesla had already taken some actions in China this year, but the results were not as expected.

The refreshed Model Y launched by Tesla in January didn't lead to an obvious rebound in overall sales due to minor changes and production capacity limitations. According to Guancha.cn, Tesla's China team had repeatedly reported to the U.S. headquarters their concerns that the products couldn't meet the needs of the Chinese market, but they rarely received positive responses. Due to the lack of more feature-rich models for sale, Chinese sales staff faced increasing performance pressure.

The implementation of Tesla's FSD in China has also been full of twists and turns. Under the dual data supervision in China and the United States, Tesla has been unable to fully launch the FSD assisted driving service in China. Although in February, Tesla pushed some intelligent driving function updates to Chinese car owners by taking advantage of the vague legal regulations in China, it was soon stopped. The report also mentioned that Tesla announced a one-month limited-time free trial of the FSD intelligent assisted driving service in late March, which was also quickly halted. The regulatory authorities clearly stated that "drivers should not be used as guinea pigs."

Launching the extended "L" model is Tesla's third major move in the Chinese market this year, even though Tesla China denied similar rumors last year. Chinese consumers do prefer larger cars. Data from the Passenger Car Association shows that SUVs continue to dominate the Chinese auto market, with retail sales reaching 1.04 million units in June, a year-on-year increase of 18.5%. The sales of sedans and MPVs in June were 948,000 and 97,000 units respectively.

In terms of size, although the Tesla Model Y L is positioned as a "large six-seater," compared with the popular six-seater new energy SUVs in the Chinese market, such as the Wenjie M8 (5,190 * 1,999 * 1,795 millimeters), Li L9 (5,218 * 1,998 * 1,800 millimeters), and Denza N9 (5,258 * 2,030 * 1,830 millimeters), it doesn't have an advantage in terms of interior space. Many netizens have doubts about the comfort of the third row.

Price is also a major point of contention among consumers. Under the Weibo topic "Estimated price of Tesla Model Y L is 400,000 yuan" that went viral, most netizens had a negative attitude towards the price, saying things like "Spending 400,000 yuan for a 'cramped' experience," "If it's 400,000 yuan, there's no need to sell it," "I think around 350,000 yuan is about right..." Tesla has not officially announced the price range yet.

Production capacity is also a problem for the Model Y L. When the refreshed Model Y was launched this year, the production capacity of Tesla's Shanghai factory was strained, causing the Model Y to fall out of the top 20 in the Chinese passenger car sales list in February. Since the Shanghai factory also supplies overseas markets, the delivery in China was even more affected. The Model Y L has more significant changes, posing a more arduous challenge to production capacity.

Moreover, the Model Y L faces strong competition. A "In-depth research report on the six-seater SUV industry" by Huachuang Securities pointed out that 2025 will be a big year for the launch of six-seater SUV models. Among them, economy models in the 200,000-yuan range are expected to form a new blue ocean market, while high-end models above 300,000 yuan may face fierce competition in a red ocean market.

Some netizens speculated that Tesla released the news of the Model Y L in advance to lock in potential customers of the upcoming Li i8. Li Xiang, the CEO of Li Auto, reposted Tesla's Weibo on July 16 and said, "A respectable six-seater pure-electric SUV is coming. Users interested in six-seater pure-electric SUVs in the 200,000 - 300,000-yuan range can look forward to it. Of course, if you need a five-seater, welcome to pay attention to the Li i6 to be launched in September." In the post, the Model Y L was steered clear of the price range of the Li i8.

Li Bin, the chairman of NIO, and Shen Fei, the senior vice president of NIO and the president of LeDao Motors, also reposted Tesla's Weibo and promoted the LeDao L90. Shen Fei also said, "The six-seater SUV market will be very lively in the second half of the year. There are more and more pure-electric six-seater SUVs. Three pure-electric six-seater SUVs have been officially announced in the past few days, highlighting the trend of electrification."

Judging from the sales results of extended-wheelbase models launched by foreign automakers in the past, the Model Y L may relieve Tesla's competitive pressure in the Chinese market to some extent. However, simply lengthening the body and adding an extra row of seats is not enough for Tesla to establish new core advantages in the Chinese market. To maintain growth in the Chinese market, Tesla must make more efforts to keep up with the competition.

This article is from the WeChat official account "Power Plant", author: Zhai Fangxue. Republished by 36Kr with permission.