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Trade war

Tesla and BMW cut prices after China lowers auto tariffs

High-end brands move to regain ground lost during trade war escalation

Tesla has cut the price in China of the cheapest configuration of its mainstay Model S by 5%.

BEIJING -- Tesla and BMW have reduced prices in China for U.S.-made luxury cars in response to the Chinese government's announcement of a three-month tariff cut, looking to shore up sluggish sales in the world's largest auto market.

Tesla has lowered the price of the cheapest version of its mainstay Model S electric sedan by 5% to about 740,000 yuan ($107,000) and other models by 11%, according to Chinese media. BMW on Saturday announced 4% price cuts for models including the X5 sport utility vehicle imported from the U.S.

China said on Friday it would slash its levy on American vehicles to 15% from 40% for three months starting Jan. 1, rolling back a hike imposed in July.

Tesla initially responded to the tariff increase by lifting prices around 20%, but its sales in China reportedly plunged 70% on the year in October. The American electric-car maker changed tack the following month with price cuts of 12% to 26%. The additional reductions this month aim to recapture more business.

BMW, meanwhile, is striving to catch up with Daimler and with Toyota Motor's high-end Lexus brand. Both enjoyed double-digit year-on-year sales volume growth for the year through November, far outpacing BMW's 6% rise.

Tesla, which sold 17,000 cars in China last year, considers the country its second-most-important market behind the U.S. The company plans to build an auto plant in Shanghai now that China has relaxed regulations on foreign investment. An employee at a Tesla dealership in Beijing expressed hope that the tariff rollback will help persuade customers to open their wallets.

But with Canada's arrest of a Huawei Technologies executive at Washington's behest prompting Chinese boycotts of American brands, the outlook remains murky.

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