BEIJING — Chinese electric car brand Nope on Monday it said it was cutting prices on its cars by the equivalent of $4,200 and ending free battery replacements for new buyers, effective immediately.

The move contradicts CEO William Li’s claim in April Nio would not engage in a “price war”. Tesla and other electric car companies in China cut prices earlier this year in an effort to attract buyers.

The price cut also follows comments by Li on Friday that the company is delaying its capital expenditures and some research and development projects, according to a FactSet transcript of Nio’s first-quarter earnings report.

Li said the delay is part of an effort to address the impact on cash flow from fewer car deliveries.

The company reported cash and cash equivalents of 14.76 billion yuan ($2.07 billion) as of March, down from what it posted at the end of 2021 and 2022.

Nio’s decision “to curtail spin-offs is too slow,” analysts at China Merchants Bank International said in a note on Monday.

“It also now faces a dilemma between brand position and profitability as it has begun to cut back on service benefits, which could damage its brand image and thus sales more severely than expected.”

Analysts downgraded Nio shares to hold from buy.

Nio also announced on Monday that he would do so no longer offers free battery replacement services new buyers.

The latest monthly figures show that Nio shipments have fallen to 6,155 cars in May, down from the first quarter average of just over 10,000 vehicles per month. The monthly average in the fourth quarter was roughly 13,350 cars.

Looking ahead, Nio said it aims to deliver at least 20,000 cars per month in the second half of the year.

Nomura analysts said they expected the automaker could improve its deliveries with new models such as the ES6 SUV and the ET5 touring sedan.

“This means we expect NIO’s implied growth to be constrained by intensified competition and limited market share improvement in 2023,” the analysts said in a report.

Nomura said it expects coverage on Nio with a neutral rating. Previously, the company rated Nio as a buy.

Nio’s cash and cash equivalents fell below $1 billion at the end of 2019. However, the company made a comeback in 2020 a lifeline of about $1 billion from investors, including state-backed entities.

Li said at the weekend that the company had enough cash to support its business.

However, the company reported a sharp decline in gross margin to 1.5% in the first quarter, down from 14.6% a year ago and 3.9% in the fourth quarter.

China’s car market is the largest in the world. Thanks to government subsidies and license plate restrictions, the local electric car industry has grown, and the penetration of new energy vehicles has reached about one-third of new passenger cars sold. The category includes cars with a hybrid drive.

Earlier this month, China’s top executive, the State Council, said the country would expand incentives to buy new energy vehicles as a way to boost consumption, according to state media. He did not give details.

“Despite short-term headwinds, we believe NIO remains well-positioned with several upcoming ramps, including its lowest-cost SUV ES6, multi-year EV deployment and premium EV market leadership in China, the largest EV market, EU/global expansion. and expanding product portfolio,” analysts at Mizuho Securities said in a note on Friday.

Mizuho kept its buy rating on Nio but cut its price target from $25 to $20 per share.

Nio shares are down about 20% this year to $7.73 a share.