Shares of Xpeng Inc (NYSE:XPEV) are up nearly 14% and counting on Friday after the Chinese electric automaker revealed the starting price for the company’s new G6 smart SUV is about 20% below the cost of Tesla Inc (NASDAQ:TSLA)’s Model Y in the country.
The pricing comes at a time when EV giant Tesla's sales China were likely to hit another record quarter. China was the biggest market for Tesla's Model Y electric sport utility vehicles in the first quarter, helping it become the world's top selling vehicle during the period.
Xpeng is pinning its hopes on the new SUV to help turn around its sales after it reported lackluster deliveries in May.
"We believe that the G6 will become the best-selling model in Xpeng's history," said analysts at 86Research Ltd.
The price of Xpeng’s G6 starts at 209,900 yuan ($28,882.01), compared with Tesla’s Model Y whose starting price is 263,900 yuan.
"We do admit the G6 pricing strategy created a unique product segment of BEV (battery electric vehicle) SUV at the 200,000-230,000 yuan range, which attracts customers wanting an entry level mid-sized BEV SUV but cannot afford a Tesla model-Y or Xpeng P7i," Citigroup (NYSE:C) analysts wrote in a note.
According to the average estimates of nine analysts polled by Refinitiv, Tesla is likely to announce record global deliveries of 445,000 vehicles in April to June.
"As a comparable model for the G6, we anticipate Tesla's Model Y will soon experience another round of price reduction in China, which will slightly impact on Tesla's vehicle margin in the second half of this year," said 86Research.
Shares of XPEV are up 13.99% in mid-day trading on Friday.