On Thursday, shares of Tesla’s Chinese rivals fell as CEO Elon Musk indicated that the business would keep slashing prices to increase demand for electric vehicles in an increasingly cutthroat industry.
In Hong Kong, XPeng fell 8%, while Nio (NIO) fell 5.6%. Leapmotor and Li Auto had declines of 2.4% and 4.2%, respectively.
Hong Kong saw a 1% decline in BYD (BYDDF), the world’s biggest seller of battery and plug-in hybrid electric vehicles. 2.3% was lost by its Shenzhen-listed stock.
“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,” Musk during an earnings call with analysts on Wednesday.
“We do believe … that it’s better to ship a large number of cars at a lower margin, and subsequently, harvest that margin in the future as we perfect autonomy.”
After losing market share to rivals like the BYD company, which is funded by Warren Buffett, in China, the largest EV market in the world, Tesla began lowering its prices in October.
It again reduced costs for its Model 3 and Model Y vehicles built in China at the start of January.
As competition from other EV manufacturers intensifies, Tesla has lowered prices in various markets across the world to boost demand.
Just before reporting its first-quarter earnings, the firm lowered prices in the United States for the sixth time this year.
Price reductions appeared to have a significant effect.
According to data supplied by the China Passenger Car Association, sales of Tesla vehicles built in China increased 10% in January compared to the same month last year.
Meanwhile, the majority of its Chinese competitors reported sharp declines in sales. Sales for Leapmotor and Xpeng fell by 86% and 60%, respectively, in January.
Tesla’s pricing reductions have prompted a nationwide price war.
A number of automakers in China, including Xpeng, Leapmotor, BYD, and Huawei’s EV division, followed suit by lowering pricing or providing discounts.
“Tesla has cut prices a lot. If we don’t cut prices, we really can’t survive,” a Huawei EV salesperson told state-owned Economic Observer in February.
The CPCA’s most current numbers show that Tesla’s sales of cars built in China increased 35% in March to reach more than 88,000 units. However, BYD, which sold more than 100,000 all-battery EVs, still outsold it.
On Thursday, shares of European automakers fell as well due to worries about pricing pressure.
Despite the French company’s excellent sales and increased prices for the first quarter, Renault (RNLSY) fell 6.5%. Stellantis, the company created by the union of PSA Group and Fiat Chrysler (FCAU), decreased 4.8%.
Both the Mercedes-Benz Group and BMW (BMWYY) experienced a 2.8% decline. The largest automaker in Europe, Volkswagen (VLKAF), decreased 1.9%.
