Tesla has renewed its price war in China just days after its biggest rival in the country vowed to “demolish” Western rivals.

Elon Musk’s car maker on Monday reduced the price of two versions of its popular Model Y electric car by about 4pc.

It is at least the second round of price cuts in China so far this year and means some vehicles have been discounted by as much as 16pc.

The latest round of reductions follows flagging sales and intense competition from local electric car makers.

Sales of Tesla’s Chinese-made cars, which are built at its factory in Shanghai, fell 31pc in July from a month earlier.