Tesla has lost share to Chinese competitors, while Elon Musk’s political activities have led to steep declines in Tesla sales in Europe.

In a bid to regain market share in China, Tesla (NASDAQ:TSLA) is reportedly developing a lower-cost version of its best-selling Model Y in Shanghai. Citing people with knowledge of the matter, Reuters reported that the new model will be more compact and at least 20% cheaper to manufacture than the refreshed Model Y,

The S&P 500 fell 1.4% on Thursday, marking its lowest point of the year and sliding into a market correction, as it is now down 10.1% from the all-time high it reached less than a month ago. The Dow Jones Industrial Average also hit a year-to-date low, closing down 537 points.

Tariffs will be a headwind to corporate earnings since businesses have only two options: Absorb the cost increases, or pass the cost increases along.