Li Auto, Tesla’s nearest rival in mainland China, reduced the price of all its vehicles by up to 5.7 per cent, just a day after the US carmaker offered discounts to local customers amid an escalating discount war.

The Beijing-based company announced on Monday morning that it would cut prices by between 18,000 yuan (US$2,485) and 30,000 yuan as a way of “focusing on customer value”. It said it is determined to keep improving its offerings for Chinese families such as its large vehicles fitted with household appliances.

On Monday, it cut the price of its Li Mega multipurpose minivan by 30,000 yuan, or 5.4 per cent, to 529,800 yuan. Launched in March this year, the fully-electric minivan described by its maker as being essentially a “mobile home” is designed to cater to the travel demands of wealthy families and is fitted with a refrigerator and a sofa. ⠀

“It is a fresh sign that the electric vehicle (EV) price war has spread to the premium segment now that Tesla and Li Auto, the two leaders, have joined the price competition,” said Eric Han, a senior manager at Suolei, an advisory firm in Shanghai. “Their pricing strategies are detrimental to small and unprofitable rivals whose profit margins will be squeezed further.” ⠀

On Sunday, Tesla lowered prices of its Shanghai-made Model 3 and Model Y vehicles by more than 5 per cent, a move that came hot on the heels of price cuts it made in the US, its biggest market, on Friday. ⠀

BYD, the world’s bestselling electric-car maker, fired the first salvo in a price war in February, slashing the prices of some budget models to lure young and low-income Chinese drivers.

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