(Bloomberg) -- Renault SA slumped the most in more than six months on concerns that pricing pressure across the auto industry may derail the French carmaker’s recovery.

The shares fell as much as 7.9% in Paris after Tesla Inc. signaled it’s not done reducing electric-vehicle prices even at the expense of its industry-leading profit margins. Peers preparing to introduce more battery-powered models including Stellantis NV and Volkswagen AG also declined.

“There are still concerns over pricing at a time Tesla keeps on cutting prices,” Jefferies analyst Philippe Houchois said. “You can’t isolate what Tesla is doing because it has repercussions on the market.”

Years of supply-chain bottlenecks have left automakers with full order books, yet buyers increasingly struggle with high inflation and interest rates. Tesla’s recent moves complicate Renault Chief Executive Officer Luca de Meo’s efforts to keep sticker prices elevated even as parts shortages ease.

Read More: Tesla’s Not Done Cutting Prices as It Protects Lead in EVs making progress 

While Renault reported better-than-expected first-quarter revenue and confirmed its full-year outlook, pricing concerns dominated the company’s earnings call. Chief Financial Officer Thierry Piéton fielded several questions on the sustainability of pricing for the €42,000 ($46,091) electric Megane E-Tech hatchback, a key profitability driver. While overall pricing will likely become “a little softer” in the second half, the CFO vowed Renault isn’t planning any drastic changes to the Megane’s price tag.

Leasing fees for the EV are competitive and if there will be “short term slightly lower volumes, so be it,” Piéton said. “There is no big incentive to go cut the prices and kill residuals and go in a spiral that some of the competition is following.”

Renault will probably end up being forced to reduce prices for its EVs including the Megane E-Tech to generate the volumes it needs to comply with emissions limits in Europe, Bank of America analysts wrote this week. Such a move would have a negative impact on earnings, the analysts said.

Renault flagged an order backlog in Europe — its main market — at more than three months of sales at the end of March. The metric would remain above the target of two months through the year even with a market 30% below pre-pandemic levels, the company said. Inflationary pressure from high prices for raw materials and energy are likely to ease in the second half, the CFO said.

Earlier this year, de Meo branded Tesla’s aggressive pricing strategy as risky for the nascent EV industry. The manufacturer is pushing ahead with a deep revamp of its business.

Read More: Renault to Review EV Prices as Tesla Pressure Mounts

Renault is working on reaching a final agreement with Japanese partner Nissan Motor Co. that will allow the companies to rebalance their troubled two-decade alliance. De Meo has pursued the deal as he seeks to split Renault’s businesses and work with new partners amid the industry’s transition to EVs and increasingly sophisticated software. 

Talks with Nissan are “constructive” and Renault is pushing ahead with the carveout of its EV arm Ampere, Piéton said. The carmaker still plans an initial public offering of Ampere as early as at the end of this year if the market allows it.

(Updates with analyst comment in third paragraph)

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