Tesla Model 40% Cheaper in China Than US on Price Cuts

Tesla has significantly reduced the price of its locally built Model Y SUV in China, making it 43% cheaper than in the U.S. This move is a response to heightened competition in the Chinese EV market, where over 50% of Tesla's global deliveries occur. The price cut suggests steeper competition and potentially lower margins for Tesla, leading to a negative market reaction.

Why is the competition in the Chinese EV market significant for Tesla?

What are the potential consequences of Tesla cutting prices in China on its profit margins?