Tesla Plans New Six-Seat Model Y Variant in China

SHANGHAI (Reuters) – Tesla (NASDAQ:TSLA) plans to produce a six-seat variant of its Model Y car in China from late 2025, according to two sources familiar with the situation. This move aims to enhance the appeal of the automaker’s best-selling but aging electric vehicle (EV).

Tesla has requested suppliers to prepare for a double-digit increase in Model Y production at its Shanghai factory. Details remain undisclosed as the plan is not public.

The company has not yet responded to requests for comment. The production increase hinges on approval for factory expansion across 70 hectares (172 acres) of former farmland. Meanwhile, Tesla has already experienced a 6% year-on-year rise in Model 3 deliveries from January to June, partly due to last year’s launch of a revised version.

Launched in 2020, the Model Y is undergoing a revamp under the project named ‘Juniper’. The five-seater variant is now expected to launch in early 2025, rather than this year as initially planned.

The introduction of a six-seater variant reflects growing competition in China, particularly as domestic rivals have unveiled several Model Y competitors this year, such as the Onvo L60 from Nio (NYSE:NIO) and the Zeekr 7X, offering more spacious interiors at lower prices.

Despite being the best-selling car across all power types in China, with 207,800 vehicles sold from January to June, the BYD Seagull sedan is beginning to catch up.

Tesla anticipates increased sales in China during the third quarter due to strong growth in smaller cities, despite downsizing its sales team amid global layoffs in May, indicating improved profitability.

Additionally, the rollout of the Full Self-Driving feature is also expected to boost sales in China by year-end. While Tesla offers a seven-seater Model Y in the U.S., sources suggest that a cramped third row would limit its appeal in China. One insider remarked, “It’s not even large enough for a large-sized dog.”