Tesla’s Shanghai Gigafactory recorded its strongest monthly deliveries of the year in May as a broader recovery in China’s electric vehicle market gathered pace, although the US carmaker is likely to face intensifying competition from domestic rivals launching a wave of new models.

The factory in Shanghai’s Lingang free-trade zone delivered 85,982 Model 3 and Model Y vehicles last month, up 39.4 per cent from a year earlier and 8.2 per cent from April, according to Tesla China.

The figure includes deliveries to customers in mainland China as well as exports to overseas markets such as Europe.

“Tesla China has already rolled out several purchase incentives and charging benefits,” the company said in a statement. “Tesla will further lower the threshold for more consumers to own our vehicles.”

In mid-May, Tesla introduced a new financing package aimed at budget-conscious buyers, reducing the required down payment by about 30 per cent.

Under the scheme, a Shanghai-made Model 3 priced at 235,500 yuan (US$32,800) requires a down payment of 55,900 yuan, down from 79,900 yuan, when financed through Tesla’s five-year loan programme.