Tesla's Chinese rival Nio launches a new brand and car that undercuts the Model Y by $4,000

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SHANGHAI — Chinese electric car company Nio revealed Wednesday that the first car for its new, lower-priced brand, Onvo, will be about $4,000 cheaper than Tesla's comparable Model Y.

Deliveries for Onvo's first car, the L60 SUV, are set to begin in September, the company said. Pre-sales began after Wednesday's launch event.

Nio CEO William Li said he expects Onvo to begin selling its cars overseas at some point but didn't specify when, according to an interview with CNBC's Eunice Yoon.

Since launching about 10 years ago, Nio has focused on the premium segment of cars, priced around 300,000 yuan (US$41,500) or higher. The company has since expanded to Europe, but its monthly deliveries in China have generally remained modest versus the competition.

Onvo's L60 starts at 219,900 yuan (US$30,439) versus the Model Y's 249,900 yuan (US$34,617). Elon Musk's electric SUV has been one of the best-selling pure battery-powered electric cars in China.

Fierce competition in China's electric car market has invited new entrants and prompted many companies to cut prices.

Smartphone company Xiaomi in late March entered the electric car market with its SU7 sedan to rival Tesla's Model 3 with a price that was also about $4,000 cheaper.

The Model 3 has since cut its price by about $2,000 to 231,900 yuan (US$32,124), according to Tesla's China website. Xiaomi said Wednesday it had delivered 10,000 SU7 vehicles.

BYD, which sold more cars than Elon Musk's automaker last year when including hybrids, mostly sells cars in the range of 100,000 yuan (US$13,851) or below. BYD has started to expand into higher-price segments in the last few years.

Nio CEO Li confirmed to CNBC that the L60 is using lower-priced batteries from BYD.

Glob