Auto stocks sank again on Tuesday as as investors digested the auto giant BYD’s sweeping price cuts of as much as 34% late last week.

Geely Automobile, Brilliance China, Li Auto, and BYD fell 3%; NIO, Leapmotor, Great Wall Motor, and XPeng fell 2%; Xiaomi fell 1%.

BYD offered discounts on 22 of its electric and plug-in hybrid models until the end of June, fanning the flames of a renewed sector-wide price war. While EV sales have overall reached new annual highs, growth has been decelerating.

To kickstart sluggish consumer demand — made worse by China’s broader economic malaise — automakers in the world’s biggest car market have slashed sticker prices. Even so, stock levels at dealerships last month reached 3.5 million cars, or 57 inventory days, the highest since December 2023, according to data shared last week by the China Passenger Car Association.

Revisions by BYD include paring the price of its Seagull hatchback to 55,800 yuan ($7,780), a 20% reduction to a model that was already the carmaker’s cheapest and one that had garnered global attention for its sub-$10,000 price tag. The Seal dual-motor hybrid sedan saw the biggest price cut at 34%, or by 53,000 yuan to 102,800 yuan.

In recent months, BYD has attempted to clear inventory of older models, including ones without the new driver assist features — which the automaker announced in February would be added to its models for free. The pivot hasn’t been without problems, further hurting the struggling dealerships it does business with.

“While some of these discounts have been in place since April, the official announcement sends a strong signal of how tough the end market is,” Morgan Stanley analysts including Tim Hsiao wrote in a note.