Not too long ago, Tesla had much of China’s new EV market to itself, but as local rivals like BYD are on their way to becoming international juggernauts, the American brand is now facing more competition than ever before. To combat this, Tesla’s Chinese division has reportedly developed a new, lower-priced version of the Model Y.

The stripped-down SUV is aimed at recovering market share from Chinese makers offering less-expensive models.

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.

But now, it seems that the view of Tesla as a luxury foreign EV maker is waning and demand for Tesla’s cars in general is cooling. Despite a revamped Model Y going on sale in China recently, its overall sales in the country dipped by 51.47% in January, according to Teslarati.

Telsa plans to make a slightly smaller Model Y that costs at least 20 percent less to build than the recently refreshed Model Y.