Tesla is playing a brutal price game of 'how low can you go' with its Chinese EV rivals

• Tesla slashed prices for its Model 3, S, X, and Y in China by $1,930 each over the weekend.

• The wave of price cuts has come amid declining sales and heightened competition from Chinese rivals.

• "Tesla prices must change frequently in order to match production with demand," Musk said on Sunday.

Tesla, eager to hold on to its market share in China, is amping up its price war against its Chinese rivals amid declining sales.

The electric-vehicle manufacturer slashed its prices in multiple markets over the weekend. In China, Tesla has reduced the price of its Model 3, S, X, and Y by 14,000 yuan, or about $1,930. The Model Y now costs 249,900 yuan.

A similar cut was also applied in the US last Friday, with the Model S, X, and Y being given price cuts of $2,000 each. Prices for Tesla's new Cybertruck and Model 3 remain unchanged in the US.

Tesla's moves didn't go unnoticed by Chinese automakers, who responded in kind. On Monday, Li Auto introduced price cuts between 18,000 and 30,000 yuan across all its models.

The Chinese automaker BYD also slashed prices back in March when it launched a cheaper version of its Yuan Plus car. The vehicle was sold at 120,000 yuan and was about 12% cheaper than its predecessor.

Tesla CEO Elon Musk defended his company's pricing strategy on Sunday, writing on X that "Tesla prices must change frequently in order to match production with demand."