Visitors check a Tesla Model 3 car next to a Model Y displayed at a showroom of the U.S. electric vehicle (EV) maker in Beijing, China February 4, 2023.

Florence Lo | Reuters

Tesla on Wednesday slashed the price of the existing inventory of its Model S and Model X cars in China, as the company looks to boost sales amid rising competition in one of its key markets.

The Model X is on sale for 836,900 Chinese yuan ($114,677) down from 898,900 yuan previously, Tesla said in a post on Chinese microblogging service Weibo. The Model S is now offered at 754,900, reduced from 808,900 yuan.

The electric carmaker, run by billionaire Elon Musk, made another round of price cuts this week for the Model Y and Model 3 in China.

In the U.S., Tesla rolled out a cheaper version of it Model S and Model X vehicles — which are not new issues, but are range limited by software.

Tesla continues to focus on gaining market share and boosting car sales at the expense of margins. In its June quarter earnings, the carmaker reported operating margins of 9.6% — its lowest for at least the last five quarters.

The continuing discounts concern investors, who worry margins may erode too much.

Tesla shares were down around 2% in pre-market trade after falling nearly 3% on Tuesday.

Tesla’s discounts have caused fears of a price war in the Chinese market, which could impact smaller players. Shares of Chinese electric vehicle upstarts Xpeng, Nio and Li Auto were all lower in pre-market trade in the U.S.

The lower price come as the Chinese economy struggles to regain a stable footing after exiting a period of strict Covid-19 restrictions, with consumers still cautious on spending.

Tesla sold 64,285 China-made electric vehicles in July, down 31% from a month earlier, according to the China Passenger Car Association.

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