In an attempt to stay ahead of its competitors in China, the world’s biggest EV market, Tesla has announced a price cut on four of its locally manufactured models.

According to figures by Bloomberg, the Model 3 sedan has been lowered by 5.9% to 245,900 yuan ($34,300), while the starting price of the Model Y sport utility vehicle has seen a 2.8% reduction to 258,900 yuan.

These price adjustments come on the heels of a reported 15.7% month-on-month sales growth to 75,805 units in mainland China in December.

As a result of the announcement, Tesla stock declined by 2.8% this morning.

The industry awaits the response of other manufacturers in the region as the move could escalate the pricing battle initiated by the U.S. electric carmaker at the onset of the previous year.

Earlier in January 2023, Tesla’s decision to reduce prices in China ended up instigating a price war as numerous other automakers attempted to maintain competitiveness.

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While the price war resulted in increased sales, it also posed a threat to the overall profitability of the industry as margins reduced drastically.

Today’s decision aims to address concerns over predictions of low growth of China’s EV market in 2024, which according to Bloomberg is forecasted to slow down to a 25%.

Although the numbers still showcase considerable growth, it is a considerable slowdown when compared to the 96% figure registered in 22%.

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