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Tesla introduced new price cuts in China in response to a significant decline in vehicle sales in July from June, Reuters reported on Monday. The announcement sent Tesla’s stock tumbling over 3% in the market pre-open.

Tesla Trims Prices of China-made Model Y Versions

Shares of Tesla plunged 3% in premarket trading Monday after the electric vehicle (EV) maker announced fresh price cuts in China to address the sales slowdown in the world’s largest auto market. The stock was at $235 in premarket at the time of publication.

The share price slip comes after Elon Musk’s car manufacturer reduced prices of its Model Y long-range and performance models in China, per the company’s notice released on Aug. 14. Specifically, Tesla trimmed the starting prices of both versions by 14,000 yuan (around $1,900). The long-range Model Y base model is now 4.5% cheaper at 299,900 yuan, while Model Y Performance starts at 349,900 yuan, down 3.8%.

In addition, Tesla said it would provide insurance subsidies in China of 8,000 yuan for those who opt for entry-level, real-wheel-drive versions of Model 3 cars. Customers can apply for subsidies between Aug. 14 and Sept. 30.

Tesla’s China-made Vehicle Sales Fell 31% in July

The move represents the latest price cuts for Tesla in the US and China in response to a global drop in demand for the world’s most popular electric cars. Furthermore, some price cuts aimed to make specific Tesla models eligible for federal tax credits introduced in the Inflation Reduction Act (IRA).

Sales of Tesla’s China-made cars plummeted 31% last month from June, official data from China Passenger Car Association (CPCA) revealed. This was the first month-on-month for Tesla’s cars produced in China since December. Tesla’s car sales in China have declined since the end of 2022 as local EV makers such as BYD recovered ground with more favorable prices. In February 2023, however, the automaker’s sales in China saw a 31% year-over-year increase.

Meanwhile, on a global level, Tesla’s vehicle deliveries in Q2 2023 exceeded 466,100 units, marking a quarter-over-quarter increase of around 10.23% and a new record-high for the brand. 

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