The new EV, codenamed “E41,” will use existing parts and assembly lines but will cost at least 20% less than the Model Y.

In a bid to regain market share in China, Tesla ( NASDAQ: TSLA) is reportedly developing a lower-cost version of its best-selling Model Y in Shanghai.

Tesla will make a lower-cost version of its best-selling Model Y in Shanghai, three people with knowledge of the matter said, aiming to regain ground lost during a price war in its second-largest market.

The US company’s share of the world’s largest EV market has dropped to 4.3 per cent from more than 16 per cent in 2022.