Tesla (NASDAQ:TSLA) shares fell more than 1% yesterday following the company’s decision to lower prices for certain vehicles manufactured in China. This move has sparked concerns about escalating price competition within the country.

In an announcement on Monday, Tesla revealed that it had decreased the starting prices of its Model Y long-range and performance models by 4.5% and 3.8% respectively.

Additionally, Tesla stated that it would provide insurance subsidies to buyers of its entry-level, rear-wheel drive Model 3 in China until the end of September, signaling the intense rivalry for market share in China’s electric vehicle sector. Competitors like Geely Automobile Holdings’ Zeekr brand and Zhejiang Leapmotor Technology have also introduced similar price reductions. Sales of Tesla cars produced in China experienced a 31% month-on-month decline in July, marking the first drop since December.

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