Tesla shares fell 3% on Monday, and China’s Li Auto hit an 11-month low after both companies dropped prices of their electric vehicles in different markets due to tough competition.
In China, Tesla reduced the starting price of its Model 3 to 231,900 yuan ($32,000) on Sunday, cutting it by 14,000 yuan. They also lowered prices in places like Germany.
Li Auto also slashed prices for its models, including the L7, L8, L9, and the new Mega SUV, as announced on its Weibo account on Monday. The reductions were reportedly up to 30,000 yuan.
Both Tesla and Li Auto websites on Monday showed their vehicles listed at the new prices.
During Monday’s trading session, Li Auto’s shares in Hong Kong dropped 8.3% to their lowest in 11 months. Other Chinese EV makers also saw declines: Nio fell 1.7%, Xpeng dropped 1.9%, and BYD shed 0.2%.
This price drop comes as competition in China’s EV market heats up. Local automakers are striving to outsell Tesla with advanced technology and competitive pricing.
Eugene Hsiao, head of China equity strategy at Macquarie Group, said in a research note that China’s biggest EV makers are all aiming to “take the crown from Tesla” in what he calls the most competitive domestic auto market in recent history.
Hsiao noted that the price cuts are just one part of the various strategies Chinese EV players are using to survive “the coming wave of industry consolidation.”
Xiaomi, a Chinese smartphone maker, launched its SU7 electric car earlier this month, pricing it about $4,000 lower than Tesla’s Model 3. Xiaomi claimed the new car would also have a longer driving range.
