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The interior of the Mercedes EQS electric sedan © Getty Images for Mercedes-Benz

The Mercedes-Benz Group has slashed the prices of some electric car models in China, joining a list of automakers that have followed suit Tesla’s price cut last month, in the latest sign of slowing demand in the world’s largest EV market.

The entry-level prices of the EQE model, EQS model and its luxury edition – the AMG EQS 53 model – sold in China will be reduced by Rmb 50,000 ($7,000), Rmb 204,600 and Rmb 198,600, respectively, the German said car manufacturer .

“Our goal is to flexibly adapt operating strategies to changing market requirements,” the company said in a statement.

Mercedes-Benz is facing increasing competition from local rivals in the process of electric and digital transformation, Hubertus Troska, Daimler’s China boss, said earlier this month at the China International Import Expo, state media reported.

In October, Tesla lowered prices for its Model 3 and Model Y sedans in China. Days after Tesla’s move, Ford Motor’s EV division and Aito, a Huawei-backed EV brand, followed suit.

Analysts warned of a price war in the country’s increasingly crowded EV sector.

“This price-cutting strategy would create an overall negative sentiment,” Citigroup analyst Jeff Chung wrote in a research note, citing stalled electric vehicle sales growth due to economic headwinds and zero-Covid controls in China.

Chung added that Tesla’s move would also put pressure on other high-end EV makers, including XPeng, Volkswagen and BYD.

China’s sales of new energy vehicles, including pure electric, plug-in hybrid and hydrogen-powered models, rose 81.7 percent year on year to 714,000 units in October, the slowest pace of growth since April, according to data from China Automakers Association.

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