TSLA: Tesla Stock Drops 3.2% After Another Round of Price Cuts in China

The EV maker is desperately trying to catch up in the competitive Chinese market as it slashed prices for the second time in less than a week.

• Tesla stock TSLA fell 3.2% on Wednesday after the Elon Musk-run EV company announced its second round of price cuts in China in less than a week. The starting prices of select Model Y and Model X versions just got about $2,000 cheaper for Chinese buyers, or a reduction of up to 6.9%.
• Fierce competition is looming in the Chinese EV market. Tesla’s domestic rival, Warren Buffett-backed BYD, is taking the lead as the country’s largest automaker by sales. Other notable EV manufacturers in China include state-owned SAIC, SAIC-owned MG Motor, and Great Wall Motor – all have significantly lowered prices across models this year.
• China’s auto industry has shown signs of slowing growth, prompting EV brands to aggressively reduce prices and trim their profit margins in efforts to attract hard-to-get customers. All that price slashing will inevitably show up in the top and bottom line of EV makers this quarter. Skewed profit margins = better deals for customers!