Chinese electric vehicle maker Nio Inc.’s (NYSE:NIO) CEO William Li believes EV brands that gain market share by “constantly lowering” prices will only hurt their own brand image, cnEVpost reported Thursday.

What Happened: Li said during Nio’s first-quarter earnings call that a higher gross margin will allow EV makers to do better service after reaching a certain level.

“I don't think that increasing market share through price cuts is a good way to go, and it may not reach the target,” the Nio CEO was quoted as saying.

Li said that entering the mass market is a strategic issue and his company will definitely not enter the mass market with the NIO brand.

See Also: Nio Could Make Cheaper EVs To Capture Mass-Market But Under Different Brand: CEO

On Thursday, Nio reported first-quarter results that exceeded analysts’ expectations.

Why It Matters: Li’s comments about EV brands gaining market share through price cuts seem to be an apparent dig at market leader Tesla Inc. (NASDAQ:TSLA).

In October last year, Tesla slashed prices of its domestically-made Model 3 vehicles in China for the third time in the year. The price reductions came as the Palo Alto-based company was able to build a factory in China for locally produced cars. Nevertheless, Tesla’s price cuts created difficulties for Chinese EV makers.

See also: How to Buy Nio Stock

Tesla and Nio are pitched against each other in China, which is the world’s largest EV market. Earlier this month, Li said he thinks Tesla is the biggest beneficiary of Chinese regulations.

Tesla CEO Elon Musk too has taken digs at Nio in the past. After Nio's shares rose past a psychological resistance point of $40 in November last year, Musk brushed it off, saying, "420 is ten times better than 42," in a reference to his company's shares, which were trading at a price point about 10 times more than Nio's.

Price Action: Nio shares closed 5.3% lower on Thursday at $38.99.

Read Next: Apple, Tesla Earnings Reports Show An Increasing Reliance On China As A Market

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