Tesla Corporation (Nasdaq: TSLAThe Model Y of the electric car will help boost sales and emerge as a major disruptive to that country’s auto market in 2021, analysts estimate, mentioned By Reuters on Monday.

what happened: China – the largest car market in the world – Saw the launch Of this month’s domestically produced Model Y SUV is CNY 339,900 ($ 52,376), which is less than one-tenth of the luxury gasoline-powered cars with a similar market positioning. Daimler AG (OTC: I will), Bayerische Motoren Werke AG (OTC: BMWYY) And the Volkswagen AG (OTC: VWAGYAccording to Reuters.

„Pricing will disrupt the traditional luxury car market and shatter the traditional belief that the cost of an electric vehicle should be higher,” Cui Dongshu, secretary-general of the China Passenger Car Association, told Reuters.

See also: Tesla to Launch $ 25,000 in China by 2022: Report

Tesla Model 3 sedan, made in Shanghai, surpassed sales of similarly-positioned cars made by luxury carmakers in November, according to CPCA data.

why does it matter: Reuters noted that pricing Tesla’s Model Y would set a benchmark for carmakers to beat and push up demand.

The ongoing pandemic has led to soaring sales of new energy vehicles (NEVs), which are said to have risen 8% in 2020 to 1.3 million – well behind the Chinese government’s annual sales target of 2 million.

The China Association of Automobile Manufacturers and other analysts expect sales of NEVs – which include battery electric cars, plug-in hybrids, and hydrogen fuel cell cars – to grow by 30-40% to nearly 1.8 million units this year.

The government’s two-year extension of electric vehicle subsidies will also increase demand this year as Beijing wants new electric vehicles to account for 20% of car sales by 2025 instead of the current 5%, according to Reuters.

The New Rivalry: Tesla, other foreign players, along with domestic competitors such as New Corporation (New York Stock Exchange: NIO), Xpeng Corporation (New York Stock Exchange: XPEVA) It increases production to meet expected demand.

Nio has unveiled the First sedan, et7, During Saturday’s Nio Day event. CEO William Lee said this week that the automaker could build cheaper cars in the mass market Under a different brand.

He explained to me that the electric car maker did not see it to be his new sedan In direct competition with Tesla, But according to the CEO of Automobility Ltd. Bill Russo, Nio is well positioned to capture a large portion of the Chinese electric vehicle market.

The pricing of the et7 is „completely competitive with Tesla’s Model S” is an „ambitious statement” by the automaker, Russo CNBC on Monday.

Price movement: Tesla shares closed down nearly 7.8% at $ 811.19 on Monday and were up 0.9% in the after-hours session.

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