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.

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

Tesla has lost share to Chinese competitors, while Elon Musk’s political activities have led to steep declines in Tesla sales in Europe.

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