While Elon Musk doubles down on Tesla’s price war, Chinese electric car makers are struggling

Hong Kong (CNN) Shares in Tesla’s Chinese rivals fell Thursday, after CEO Elon Musk indicated the company would do so Continue to reduce prices To boost demand for electric vehicles in an increasingly competitive market.

XPeng shares fell 8% in Hong Kong, while New (nio) sank 5.6%. Li Auto and Leapmotor fell 4.2% and 2.4%, respectively.

BYD (BYDDF), the world’s largest seller of hybrid and battery electric vehicles, was also down 1% in Hong Kong. Its Shenzhen-listed shares lost 2.3%.

“We’ve taken the view that paying for higher volumes and a larger fleet is the right choice here for lower volume and higher margin,” Musk said during an earnings call with analysts on Wednesday.

“We believe … that it is better to ship a large number of cars with a lower margin and, therefore, reap that margin in the future as we achieve complete independence.”

In China, the world’s largest market for electric cars, Tesla began cutting prices in October after losing market share to rivals, such as Warren Buffett-backed BYD. In early January, it Lower prices again For its Chinese Model 3 and Model Y.

Tesla has lowered prices in many markets around the world to boost demand amid a growing challenge from other electric car makers. In the US, the company cut prices for the sixth time this year, just before first-quarter earnings.

The price cuts seem to be having a big impact.

In January, sales of Tesla cars made in China jumped 10% from the same period a year earlier, according to statistics from the China Passenger Car Association. Meanwhile, most of its Chinese competitors have recorded sharp sales declines. Leapmotor and Xpeng’s January sales fell 86% and 60%, respectively.

Cutbacks at Tesla triggered a price war in the country. A number of automakers in China have followed suit by lowering prices or offering discounts, including Xpeng, Leapmotor, BYD and Huawei’s EV unit.

said a Huawei EV sales representative of a state-owned company Economic observer in feb.

According to the latest statistics from the CPCA, Tesla’s sales of its China-made cars rose 35% in March to more than 88,000 units. But it still lags behind BYD, which has sold more than 100,000 pure battery EVs.

Shares of European automakers also fell on Thursday amid concerns about pricing pressures.

Renault (RNLSY) It fell 6.5% even with the French company mentioned Strong sales and higher prices for the first quarter. Stellantis, the group formed from the merger between Fiat Chrysler (Federal Communications Union (FCAU)) and PSA Group, up 4.8%.

Mercedes-Benz Group and BMW (BMWYY) Both are down about 2.8%. Volkswagen (VLKAF)Europe’s largest automaker fell 1.9 percent.

Hanna Ziadi contributed reporting