Shares in US Tesla fell 3% in premarket trading, while China's Li Auto lost 8% to an 11-month low, as electric car makers slashed prices in response to stiff competition. About this CNBC reports.
American electric car maker Tesla cut the starting price of its Model 3 in China to 231,900 yuan ($32,000) this Sunday, down 14,000 yuan, according to Reuters. According to the report, the company also cut prices in other major markets, including Germany.
Meanwhile, Chinese electric car maker Li Auto has announced price cuts for its models, including the L7, L8, L9 and the recently launched Mega SUV, according to a post on its Weibo account on Monday. It is noted that price reductions for individual models reached up to 30,000 yuan.
Shares in Hong Kong-listed Li Auto fell 8.3% to an 11-month low in Monday's trading session, while shares of other Chinese electric car makers also fell: 1.7%, 1.9% and by 0.2%.
The drop came amid intensifying competition in China's electric car industry, where local automakers are trying to outpace American giant Tesla. Eugene Xiao, head of China equity strategy at Macquarie Group, said in a research note that the main goal of all the top Chinese electric car makers is to take the lead from Tesla, describing the process as the most competitive period in the domestic car market in modern history.
Xiao added that price cuts are just one aspect of a variety of strategies that major players in China's EV market are using to survive “the coming wave of industry consolidation.”
Chinese smartphone maker Xiaomi launched its SU7 electric car earlier this month for about $4,000 less than the Tesla Model 3. The company also said the new car will have a longer range.