Tesla Inc. (NASDAQ:TSLA) has started making deliveries of its Shanghai, China-manufactured Model Y crossovers. This is a huge milestone for the company in the fast-growing electric vehicles market. 

Tesla delivers first made-China Model Y

According to Xinhua News Agency, deliveries began on Monday but it is unclear on the number of Model Y car delivered. Equally, it is still unclear whether the deliveries were to retail customers or employees as Tesla is yet to comment on the same. Tesla broke the ground for its Shanghai Gigafactory two years ago as it sought to expand its capacity and produce cars locally for the largest EV market in the world. Producing the EVs locally saves the company shipping costs and helps it avoid import duties.

The Chinese market is very important to the Palo Alto, California-based company’s growth plans. Tesla is planning to increase vehicle sales volume to 20 million in the next ten years. China contributed significantly to Tesla’s car delivery volume last year with around 499,550 vehicles delivered. This was an impressive 36% YoY increase but slightly below its guidance of 500,000 units. 

Model 3 sedan was Tesla’s bestselling car in 2020

Notably, the Model Y car is the second Tesla car that the EV maker is producing at the Gigafactoryafter launching the Model 3 sedan that it started delivering over a year ago. As Tesla ramped production of the Model 3 sedan, it was also constructing an assembly line for the Model Y cars. Last year Model 3 was Tesla’s bestselling EV in china with over 138,000 units delivered which is an eight of all the EVs sold in the country. 

The conditions in China are favorable for Tesla to continue growing sales considering the government wants EVs to be around 20% of all car sales by 2025. Analysts have projected the Chinese EV market to grow strongly in the next few years. However, Tesla has to battle for market share with competitors such as Nio Inc. which plans to unveil its luxury ET7 sedan.