Tesla prepares China-to-Canada Model Y shipment. According to a person with firsthand knowledge and a production letter seen by Reuters, Tesla has started manufacturing a Model Y for Canada in Shanghai.

Tesla’s (TSLA.O) largest and most cost-efficient factory would connect to North America, its largest market. The Model Y is the EV maker’s best-selling model worldwide.

Tesla announced on its website over the weekend that it would sell a rear-wheel drive Model Y in Canada for C$10,000 ($7,377.90) less than the long-range version.

Tesla’s website indicated Canadians could receive the new Model Y between May and July.

On Friday, the Canadian government’s website showed both the new Model Y and the more expensive long-range variant qualify for C$5,000 purchase or four-year lease incentives.

The source stated Tesla Shanghai started making the Canada-bound Model Y early this month. The production memo acquired by Reuters stated that vehicles were designed and tested for export to North America, with a target of approximately 9,000 this quarter.

Tesla did not comment.

Reuters reported in November that Tesla contemplated selling Chinese-made cars to North America. “False,” Tesla CEO Elon Musk tweeted after the Reuters report.

Musk told analysts last week that Tesla’s Shanghai plant has the “lowest cost structure” of its factories.

To receive a C$5,000 subsidy from Canada’s transport agency’s EV incentive program, an SUV’s base model must cost under C$60,000. At C$70,000, higher-priced models are eligible.

Transport Canada announced Friday that the cheaper Model Y and Tesla’s C$69,900 long-range Model Y were eligible for the incentive.

Tesla’s Shanghai plant makes Model Ys for China and Europe using lithium-iron-phosphate (LFP) batteries.

Tesla is producing 4680 battery configurations in Texas and California.

The Canada-specific Model Y has an EPA-rated range of 245 miles (394 km). The U.S. entry-level Model Y with all-wheel drive has an EPA-rated range of 279 miles.

The entry-level Canadian Model Y costs $44,275, compared to $46,990 for the U.S.

Tesla has cut Model Y prices in the U.S. three times since the start of the year to boost sales, which cut into its first-quarter profit and started an EV price war.

Last year, it exported 271,000 Model Y and Model 3 sedans from Shanghai to Europe and other countries, around 20% of its global sales.

China exports EVs beyond Tesla. Renault (RENA.PA) exports the Dacia Spring, an entry-level hatchback EV, to Europe. China supplies the BMW iX3 to Southeast Asia and Europe.

If the first-quarter rate continues, China’s automotive exports will reach three million this year.