AITO is the first NEV brand to follow 's price cut, and industry insiders believe a wave of price cuts in the auto industry is about to begin.

(Image credit: AITO)

-backed new energy vehicle (NEV) brand AITO has started offering discounts to car buyers, becoming the first local brand to do so after Tesla's price cut.

AITO is offering discounts on both models currently on sale -- the M5 and the M7 -- allowing consumers to save RMB 8,000 yuan ($1,100) on the final payment for the car, local media outlet The Paper said Tuesday, citing salespeople for the brand.

AITO is the first NEV brand to follow after Tesla's price cut, and many industry insiders believe a wave of price cuts in the auto industry is about to begin, the report said.

Auto Home later cited AITO's response as saying that it had canceled services previously offered since October 24, including interest discounts on loans and gifts from sales stores, but offered a uniform insurance subsidy worth RMB 8,000 to consumers who buy some existing vehicles.

Tesla on Monday cut the prices of its entire Model 3 and Model Y lineup in China, with the starting price of its most popular entry-level Model Y in China being reduced to less than 300,000 yuan so it can take advantage of China's state purchase subsidy.

The entry-level rear-wheel drive Model Y's latest subsidized starting price is RMB 288,900, down RMB 28,000 from the previous RMB 316,900.

AITO, the premium smart car brand launched by Seres and Huawei last December, is currently selling the M5 and M7, with the former offered in an all-electric version and a version with extended-range technology and the latter currently available only in a version with extended-range technology.

The M5 with extended-range technology is priced from RMB 259,800 to RMB 331,800 after subsidies, while the all-electric version is priced from RMB 288,600 to RMB 319,800. The M7 is currently priced from RMB 319,800 to RMB 379,800.

In September, AITO delivered 10,142 vehicles, the second consecutive month with more than 10,000 units.

Huawei-backed AITO allows consumers who pay deposits by Nov 20 to enjoy this year's purchase subsidies-CnEVPost

The M5 and M7 are both SUVs and have a lot of overlap in the price range with the Tesla Model Y. Tesla's price cut is set to have an impact on the purchasing decisions of potential consumers of these two models.

Tesla's move will force automakers to adjust their pricing strategies, The Paper said, citing an unnamed analyst at Soochow Securities.

Tesla's direct competitors, including China's new car makers and mainstream car companies including , and Changan, will likely follow suit with price cuts, the analyst said.

NEVs in the price range of RMB 200,000-400,000 will be directly affected, while internal combustion engine vehicles in the same price range and models in the RMB 100,000-200,000 price range may also be affected, the analyst said, adding that a new wave of price cuts in the sector could emerge.