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Tesla shares slide as trade war forces it to slash prices in China

The basic version of the Model S now costs US$113,000 — down from US$122,525 — while the most expensive version of the Model X has gone from US$227,000 to around US$171,000

tesla showroom
Competition in the electric vehicle market is intense in China

Tesla Inc (NASDAQ:TSLA) shares fell on Thursday after the electric carmaker confirmed it has slashed the prices of its cars in China in a bid to protect sales.

China has slapped US carmakers with extra tariffs in recent months as the trade war with the US escalates.

The levies mean Teslas have become considerably more expensive than they were, so the company, led by eccentric billionaire Elon Musk, has cut prices of its Model S and Model X by between 12% and 26%.

READ: Tesla cuts solar power prices

Tesla hopes the move will allow it to remain competitive in the world’s largest car market.

“We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China,” a Tesla spokesperson said in a statement.  

It is not the first time Tesla has readjusted its prices in China. In May, the firm lowered prices of its models after Beijing officials said they would cut import tariffs for all auto imports.

Only a couple of months later, it hiked prices in response to the tariffs. But with demand in China for electric vehicles growing rapidly, Tesla doesn’t want to see its market share eroded.

The tariffs have forced Tesla to accelerate investment in its first overseas Gigafactory in Shanghai as cars made there would be exempt from additional duties.

The stock fell 2.7% to US$338.19 on Thursday. It is marginally up in after-hours trading at US$338.40.

Quick facts: Tesla Inc

Price: 420.63 USD

NASDAQ:TSLA
Market: NASDAQ
Market Cap: $392.67 billion
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