Shares of Chinese electric automakers, Xpeng (NYSE:XPEV), Li Auto (NASDAQ:LI) and Nio (NYSE:NIO) are down in early trading Monday morning after American competitor, Tesla (NASDAQ:TSLA) announced additional price cuts to their Model Y vehicles.
Tesla announced Monday, a reduction in prices for its Model Y long-range and performance editions in China, slashing them by 14,000 yuan (1 yuan = $0.138). This move follows a series of price cuts since the company's introduction of a "price war" for electric vehicles in January.
Evercore ISI analysts predicted in a research note that comparable targeted price reductions might be seen in the U.S. and Europe.
The latest cuts also come in the wake of a call-to-action by Chinese automotive giant BYD (OTC:BYDDY) last week.
The top-selling automobile manufacturer in China gained online attention this past Wednesday after the automaker called for the Chinese automotive industry to band together and “demolish the old legends.”
The company aired a video commemorating rivals like Xpeng, Nio, and Li Auto, among others.
The video went viral on Chinese social media, with several rivals posting notes of admiration.
"I feel proud for China’s auto industry!" said William Li, CEO of Nio. "Salute to BYD!" said Li Xiang, CEO of Li Auto.
Throughout the year, Tesla has continued offering substantial price cuts globally, aiming to safeguard its market presence. CEO Elon Musk has also suggested that his company would continue to reduce prices, even if it has an impact on profit margins, arguing the value of Tesla models will increase once the company’s autonomous driving program is perfected.
Shares of XPEV, LI and NIO are down 1.32%, 3.69% and 6.51% in early trading Monday morning.