Shares in Tesla, Inc. (NASDAQ: TSLA) plunged over 5% on Friday after the electric vehicle (EV) giant reduced the prices of its premium Model S and X cars in China. This comes shortly after Tesla introduced an updated version of its popular Model 3 mass-market sedan.
The US automaker opted to slash the cost of its base Model S sedan by 14%, bringing it down to 698,900 yuan ($96,200) in China. Likewise, the entry-level Model X sport utility vehicle saw an 18% price reduction, now priced at 738,000 yuan. These adjustments were officially published on Tesla’s website. Furthermore, the price of the self-driving feature was slashed by $3,000 to $12,000.
This move comes amid an ongoing price war between Tesla and its Chinese rival, BYD, an automaker known for producing batteries in-house. BYD had secured the second-largest global market share in the EV industry, boasting 16.2% in Q1.
The price war began in January when Tesla, Inc. (NASDAQ: TSLA) initiated price cuts in China, setting off a domino effect as other auto manufacturers scrambled to match their prices to remain competitive.
A so-called truce was put in place to prevent further price deterioration. However, this pledge was abandoned on July 10th when The China Association of Auto Manufacturers (CAAM) acknowledged that it had violated China’s antitrust laws.
Recent developments reveal that Tesla has reignited the EV price war by initiating another round of price reductions earlier this month. The EV giant offered discounts on two versions of its Model Y, reducing prices by 4% or roughly $1,900.
As of press time, Tesla stock is trading at $243.71, marking a significant 5.55% drop compared to the previous trading session.