Tesla has stepped up the competition in China after introducing a lower-priced Model Y variant. The strategy has paid off as the Elon Musk-led company has reportedly secured a flood of orders but raised fears of doom and gloom for China's new carmakers. 

Zhongtai Securities analyst sees the move as overblown as China's new carmakers are competing differently both in terms of demand and pricing.

See Also: Nio CEO Says EV Maker 'Still Pretty Stressed Overall' But Not Because Of Competition

Why It Matters: Tesla has introduced a more affordable variant of electric mid-size SUV Model Y in China, which qualifies for a subsidy as well as it is sold under RMB 300,000 ($46,000), the benchmark. Deliveries are expected to begin in August.

Tesla’s biggest rival Nio at the moment operates a portfolio that is more expensive and not eligible for the subsidies as they are all priced over the RMB 300,000 limit.

Price Action: Tesla shares closed 0.31% higher at $646.22 on Monday. Nio closed 1.29% higher at $43.35. 

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