Model Y+ Arrives: Can Tesla Reignite Its China Momentum Against BYD and XPeng?

The Competitive Landscape Shifts

China’s EV market has entered a new phase. BYD Co Ltd has decisively overtaken Tesla as the volume leader, while XPeng Inc. and NIO Inc. are accelerating their growth trajectories. In Q3 2025, BYD delivered 582,500 pure electric vehicles—a 31% year-over-year surge—marking its fourth consecutive quarter ahead of Tesla globally. XPeng has been particularly aggressive, posting 116,007 deliveries in Q3 2025, representing a staggering 149% year-over-year jump. NIO, too, logged a record quarter with 87,071 vehicles, up 40.8% year-over-year.

Tesla’s Q3 2025 global deliveries reached 497,099 units, up 7.4% year-over-year but trailing BYD’s output. The pressure is mounting, and buyers in China are increasingly favoring domestic makers.

Tesla’s China Challenge in Numbers

Tesla China’s performance reflects the intensity of competition. From January to August this year, Tesla China sold 515,552 vehicles (including exports), down 12.2% year-over-year. However, August showed signs of stabilization—local sales jumped 41% month-over-month to 57,152 units, with Giga Shanghai producing over 83,000 vehicles in its strongest wholesale month this year.

The Model Y remains Tesla’s workhorse in the Chinese market, accounting for roughly 70% of local sales and ranking as the second-best-selling vehicle nationwide. The recent launch of the Model Y L, a long-wheelbase variant targeting family buyers, provided a sales lift, but ongoing price competition continues to constrain margins.

Introducing Model Y+: The Long-Range Bet

Tesla has filed for regulatory approval of a new Model Y+ variant in China, signaling a strategic pivot toward what buyers increasingly demand—range and efficiency. The Model Y+ will feature a 225 kW (302 hp) single-motor setup powered by ternary batteries from LG Energy Solution, mirroring the engineering approach of the Model 3+ launched earlier this year.

The headline figure: approximately 800 kilometers (nearly 500 miles) of CLTC range—making it the longest-range Model Y variant in Tesla’s China lineup. This extended range capability addresses a critical buyer concern in a market where daily range capability has become a primary decision factor.

The Model Y+ represents Tesla’s next major initiative to restore competitiveness. Whether this longer-range offering sufficiently closes the gap against entrenched local competitors remains to be seen, especially as BYD, XPeng, and NIO continue launching their own range-focused models.

The Valuation Question

From an investment perspective, Tesla shares have climbed 72% over the past six months, slightly outpacing the 70% industry growth. However, Tesla trades at a forward price-to-sales ratio of 13.81—substantially above sector averages—carrying a Value Score of F. The Zacks Consensus Estimate suggests earnings revisions have been modest over the past quarter, and the stock currently holds a Zacks Rank #3 (Hold) rating.

The Model Y+ launch reflects management’s conviction that product innovation, not discounting alone, can drive recovery in China. Whether the market agrees will become clearer as adoption data emerges.