Tesla Inc.it is TSLA recent price declines in China may not have produced the desired effect, as the national economy continues to bear the brunt of the COVID-19[feminine] recurrence.

What happened: Tesla plans to announce another round of price cuts before the end of the year as orders fell short of company expectations, local tech outlet Huxiu said, citing unnamed sources. , reported CnEVPost.

After a series of price hikes earlier this year in response to rising input costs, the electric vehicle maker in late October announced price cuts of around 5% on its Made-in-China, or MIC, vehicles. , Model 3 and Y. The October price drop, according to the report, resulted in an additional 50,000 units on order.

Later on Nov. 8, Tesla said consumers who buy Model 3 and Y-model vehicles that were produced before December 31 and have auto insurance with its insurance partners will receive a discount of up to 8,000 yuan (about $1,120).

See also: As Tesla languishes at a 2-year low, here’s how much $1,000 invested in the stock would be worth if Cathie Wood’s price target were hit

Tesla’s new orders in China remain anemic, averaging just a few cars per store per day, according to the report, citing Huxiu. The poor reception of Tesla’s two previous promotions has been blamed on its inability to pay attention to the actions of competitors. The report also noted that new customers who have not yet ordered or taken delivery have been waiting on the sidelines to see if Tesla will cut prices, the report adds.

Why it matters: China is facing a difficult time as several key cities and regions are forced into lockdown amid the resurgence of COVID-19. While these lockdowns have impacted production due to supply chain constraints and factory closures, demand also poses a risk.

In an uncertain economic environment, consumer discretionary items such as cars will be deprioritized by consumers, which in turn should dampen demand.

Price Action: Tesla closed Monday’s session down 6.84% at $167.87, according to data from Benzinga Pro.

Read more : How to Invest in Tesla Stock (TSLA)

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