Tesla shares experienced a decline in premarket trading on Monday, while China’s Li Auto saw a sharp drop to an 11-month low following the announcement of reduced prices for their electric vehicles in several markets, reflecting heightened competition.
The U.S.-based electric vehicle titan Tesla slashed the starting price of its Model 3 in China to 231,900 yuan ($32,000) on Sunday, marking a reduction of 14,000 yuan, as reported by Reuters. Additionally, the report indicated price cuts in other key markets, such as Germany.
Concurrently, Li Auto announced price reductions for its vehicle lineup, including the L7, L8, L9, and the recently launched MEGA SUV, through its Weibo account on Monday. The reductions for these models were reportedly as much as 30,000 yuan.
Upon verification by CNBC of both Tesla and Li Auto websites on Monday, their vehicles were indeed listed at the revised prices.
In response to these developments, Li Auto’s Hong Kong-listed shares plummeted 8.3% to their lowest level in 11 months during Monday’s session. Likewise, shares of other Chinese EV manufacturers also witnessed declines — Nio decreased by 1.7%, Xpeng by 1.9%, and BYD by 0.2%.
The price adjustments coincide with heightened competition within China’s EV sector, where local automakers are striving to outpace U.S. competitor Tesla with advanced technology and competitive pricing.
Eugene Hsiao, head of China equity strategy at Macquarie Group, highlighted in a recent research note that China’s leading EV manufacturers share a common objective of surpassing Tesla, acknowledging the intense competition in the domestic auto market.
Hsiao emphasized that the price cuts are just one aspect of the multifaceted strategies employed by major EV players in China to go through “the impending wave of industry consolidation.”
Moreover, Chinese smartphone manufacturer Xiaomi launched its SU7 electric car earlier this month, pricing it approximately $4,000 lower than Tesla’s Model 3. Xiaomi also claimed that the new vehicle would offer a longer driving range, further intensifying competition in the market.
