Tesla has lowered prices by up to 9% for vehicles sold in China, as the EV maker is facing growing competition from local rivals and falling cost materials.
The starting price for the Model 3 sedan was reduced to 265,900 Chinese yuan ($36,615) from 279,900 yuan. The Model Y sports utility now costs 288,900 yuan from 316,900 yuan before.
Shares of the Texas based company slipped 5% Monday in early trading. The price cuts are the first by Tesla in China in 2022.
Tesla is now China’s third best-selling EV maker after BYD Motor and SAIC-GM-Wuling, and is the only foreign player in the market.
In March, Tesla CEO Elon Musk warned that his company was seeing significant inflation pressure in raw materials and logistics. However, last week the billionaire noted that China was “experiencing a recession of sorts.”
The price reduction is expected to start a price war in the coveted Chinese market according to analysts.
The U.S. automaker and other Chinese EV makers have hiked prices several times since last year amid rising raw material costs.
Last week Tesla said it expected to miss its vehicle delivery target this year. The EV maker delivered 343,000 units for the quarter ended Sept. 30, missing analyst expectations.
