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Tesla faces competition from cheaper European, Chinese EVs

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More than 25 new electric models to launch in Europe next

year

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Tesla trying to reverse steep market-share losses in

Europe

By Alessandro Parodi

Oct 8 (Reuters) - Tesla's lower-priced versions

of its staple Model Y SUV and Model 3 sedan face an uphill

battle in the region where Elon Musk's company arguably needs

help the most: Europe.

Unveiled on Tuesday, the $39,990 Model Y Standard and

$36,990 Model 3 will join a European market already crowded with

budget EVs, with European and Chinese brands offering more than

a dozen models below $30,000 - and more to come.

That's in contrast to the United States, where only one EV,

the Nissan Leaf, falls into that price range.

"The competition in this market is fierce," said Sam

Fiorani, vice president at research firm AutoForecast Solutions,

adding the array of EVs in Europe priced below Tesla's cheaper

Model Y and Model 3 could hamper their prospects.

LESS COMPETITION IN US, BUT LESS OPPORTUNITY

Tesla, which argues that its sometimes higher prices are

justified by superior quality and features, has suffered an

almost halving in its European market share to about 1.5% since

2023, when the Model Y was the region's best-selling car.

Analysts attribute the decline partly to an ageing product

lineup and to a backlash by some consumers against Musk for his

support of far-right politicians.

Tesla hopes the cheaper cars will revive sales after global

deliveries fell in 2024 for the first time and are forecast to

drop another 10% this year, according to Visible Alpha

estimates.

In the United States, the Model Y Standard's sub-$40,000

price tag will match or undercut rivals including Hyundai

Motor's ( HYMLF ) Ioniq 5 SUV, General Motors' ( GM )

Chevrolet Blazer, and Volkswagen's ID.4.

Still, the U.S. EV market is expected to contract in coming

quarters following the September 30 expiry of a longstanding

$7,500 tax credit for buyers. Even if Tesla's cheaper cars can

claw back some market share, Musk has said it could face a "few

rough quarters" if overall U.S. demand stalls, as expected.

In China, Tesla's new releases remain significantly more

expensive than domestic rivals such as BYD Co's Yuan

Plus and SAIC-GM-Wuling's mini EVs, which dominate the world's

biggest EV market.

DOZENS OF EVS DESCEND ON EUROPEAN SHOWROOMS

In Europe, Tesla is up against many cheaper rivals,

including the BYD Dolphin Surf that starts at 23,000 euros

($26,830), the Dacia Spring at 16,800 euros and the Citroen e-C3

SUV at 23,300 euros. And more are coming.

Last month, Volkswagen said it planned an

ID.Polo compact hatchback EV for under 25,000 euros next year.

However, Pedro Pacheco, vice president of research at

consultancy Gartner, said the Model Y Standard would probably be

cheaper than BYD's best-selling Seal plug-in hybrid SUV.

Tesla halted sales declines in some European markets in

September after refreshing its Model Y with interior and

exterior upgrades, helping deliver record third-quarter global

deliveries.

Still, analysts say its limited lineup is ageing. The Model

Y, launched in 2020, remains its last mass-market new model.

CHEAPER MODEL Y 'ISN'T GOING TO BREAK THE MARKET OPEN'

Schmidt Automotive analyst Matthias Schmidt said the cheaper

Teslas should "add more momentum" from next year, but warned

that Europe's EV market is about to get much more crowded.

AutoForecast Solutions projects more than 25 new EVs

launching in Europe next year, with roughly a dozen more by

2027.

Fiorani forecast the Model Y Standard could sustain Tesla's

European sales based on current pricing information.

But "it isn't going to break the market open in a way that a

30,000 euro vehicle would," he said.

(Additional reporting by Abhirup Roy. Editing by Mike Colias,

Nick Carey and Mark Potter)