A Tesla showroom in Beijing. Photo / Getty Images
Tesla is cutting the price of its cars in China as Elon Musk's electric car company faces fierce competition from local rivals in its second-biggest market.
The US manufacturer has reduced its prices by as much as 9pc, kicking off a price war with cheaper Chinese manufacturers such as BYD and Great Wall. The starting price for the Tesla Model 3 sedan has been cut to 265,900 renminbi ($64,300) from 279,900 ($67,700). The more upmarket Model Y now costs 288,900 ($69,90) renminbi, down from the previous price of 316,900 ($76,600).
[In New Zealand, the Model 3 costs $76,943 or $68,318 after the clean car discount; the Model Y from $78,243 or $69,618 post-discount. Tesla buyers in China can claim EV subsidies of $2750 to $3000.]
The reductions come as the threat of weaker demand creates intense competition among manufacturers. Global recessionary fears and rising inflation are prompting people to put off large purchases such as cars.
China is an increasingly important market for Tesla as demand flags elsewhere, but analysts say the business faces growing competition from local rivals. Shenzhen-based BYD overtook Tesla as the world's biggest electric car company by sales in the first half of this year.
Price cuts come after reports last month that Tesla was changing its sales strategy in China, shutting urban showrooms in cities such as Beijing in favour of more suburban locations.
Tesla shares dropped over 5pc in early trade in New York on Monday following reports of the price cuts.
Last week Tesla's shares slumped after it reported quarterly sales that were $640m short of expectations. It has struggled to deliver its cars on time.
Earlier this month Mr Musk felt the ire of Taiwanese politicians after he suggested that the island should cede some control to Beijing.
China has long claimed authority over the independent island, despite strong resistance from the Taiwanese and allies such as the US. Mr Musk suggested the island could adopt a "one country, two systems" approach similar to Hong Kong. Taiwan's ambassador to the US, Hsiao Bi-khim, responded by saying Taiwan's "freedom and democracy are not for sale".
Separately, the chief executive of the company behind the Peugeot, Fiat, Citroen and Vauxhall brands has warned European leaders not to let Chinese car makers freely expand.
Stellantis boss Carlos Tavares told Autocar that "naive and dogmatic" European rules were giving Chinese electric car makers free access to European buyers but European car makers faced high tariffs if they tried to export to China.
Mr Tavares said: "The EU is wide open and it is not acceptable. Don't support Chinese companies in Europe with easier rules than we're getting there. Do you want to put your mobility in the hands of the Chinese state?"
Chinese brand Ora plans to start selling its Funky Cat model in Britain from next month, while dealership Pendragon is in talks to launch BYD into the UK market.