Li Auto on Monday announced price cuts of about 6-7% across its lineup, with the L7 five-seat sport utility vehicle now starting from 301,800 yuan ($41,700). 

People who have already ordered but not taken delivery of their cars will be entitled to the new price, and Li Auto will offer cash rebates to existing owners of the 2024 models. The automaker’s shares slumped as much as 6.9% in Hong Kong trading. 

Tesla lowered prices across the U.S., China and Europe after disappointing first-quarter sales contributed to swelling inventory. In China, the revamped Model 3 fell to 231,900 yuan from 245,900 previously—back to its special launch price. The Model Y was discounted to 249,900 yuan—the cheapest it’s been in at least five years. 

China’s EV price war has been running since late 2022, when Tesla first cut prices. It intensified through last year as automakers struggled to meet sales targets, and has shown little sign of abating this year, with market leader BYD Co. discounting some of its most popular cars, including the Seagull hatchback to less than $10,000. 

On Tuesday, Tesla is expected to report a 40% plunge in operating profit and its first revenue decline in four years when it releases first-quarter earnings. Chief Executive Officer Elon Musk has ordered up the company’s biggest layoffs ever and staked its future on a next-generation, self-driving vehicle concept called the robotaxi.

In China, Tesla’s market share shrank to around 6.7% in the fourth quarter of 2023, from 10.5% in the first three months of the year, according to Bloomberg calculations based on China’s Passenger Car Association data.

The automaker recently pared back production schedules at its Shanghai factory, Bloomberg reported last month. Shipments from its Shanghai plant—which makes EVs for China and for export to other parts of Asia, Europe and Canada—declined in the first two months from a year earlier, even as overall passenger-vehicle sales in China increased.