HONG KONG (CNN) Shares of Tesla’s Chinese rivals fell on Thursday after CEO Elon Musk signaled the company would cut prices further to boost demand for electric cars in an increasingly competitive market.
XPeng plunged 8% in Hong Kong, while Nio (NIO) fell 5.6%. Li Auto and Leapmotor plunged 4.2% and 2.4%, respectively.
BYD (BYDDF), the world’s largest supplier of plug-in hybrid and battery EVs, was also down 1% in Hong Kong. The Shenzhen-listed stock fell 2.3%.
“We believe pushing for higher volumes and a larger fleet as opposed to lower volume and higher margin is the right choice here,” Musk said during an earnings call with analysts on Wednesday.
“We believe … it’s better to ship large numbers of cars with a smaller margin and reap that margin in the future as we perfect autonomy.”
In China, the world’s largest electric vehicle market, Tesla began cutting prices in October after losing market share to rivals like Warren Buffett-backed BYD. In early January, the company again cut prices on its China-made Model 3 and Model Y.
Tesla has cut prices in many markets around the world to bolster demand amid a growing challenge from other EV manufacturers. In the United States, the company cut prices for the sixth time this year ahead of first-quarter results.
The price cuts seemed to have a big impact.
Sales of Tesla’s Chinese-made vehicles rose 10% in January from the same period a year ago, according to statistics released by the China Passenger Car Association. Meanwhile, most of its Chinese rivals have seen sharp sales declines. Sales of Leapmotor and Xpeng plunged 86% and 60%, respectively, in January.
Tesla’s cuts have sparked a price war in the country. A number of automakers in China followed suit by lowering prices or offering rebates, including Xpeng, Leapmotor, BYD and Huawei’s EV unit.
“Tesla has cut prices a lot. If we don’t lower prices, we really can’t survive,” a seller of Huawei electric vehicles told the state-run Economic Observer in February.
Sales of Tesla’s Chinese-made vehicles rose 35% to more than 88,000 units in March, according to the latest statistics from the CPCA. But it still lagged behind BYD, which sold more than 100,000 pure battery EVs.
Shares in European automakers also fell on Thursday on concerns about price pressures.
Renault (RNLSY) slipped 6.5% despite the French company reporting strong sales and higher prices for the first quarter. Stellantis, the group formed by the merger between Fiat Chrysler (FCAU) and the PSA Group, fell 4.8%.
The Mercedes-Benz Group and BMW (BMWYY) both lost around 2.8%. Volkswagen (VLKAF), Europe’s largest automaker, lost 1.9%.
— Hanna Ziady contributed to the coverage