Tesla exports more electric vehicle to China than any other automaker today, but the company’s exports are likely to slow down as it raises the price of the Model S and Model X significantly due to rising tariffs as part of the current escalating trade war.
For a while, it looked like Tesla was going to escape the trade war between the US and China, and now quite frankly the rest of the world.
The company was preparing a massive push in China as import duties were planned to fall and local manufacturing is coming.
Prices of the Model S and Model X were decreased by 40,000 yuan to 90,000 yuan (~$6,000 to ~$14,000 USD) back in May.
An announcement about a Tesla factory in China was expected soon now that the automaker has set up a new company in Shanghai’s Free-Trade Zone.
It looked like Tesla was riding the wave until it could manufacture cars locally, but the trade war caught up with them and now the latest tariffs announced by the government is hitting the price of Tesla’s current vehicles in the country quite hard.
Over the weekend, the prices of the Model S and Model X were increased by 150,000 yuan to 250,000 yuan (~$22,600 to ~$37,600) depending on the version.
Those are significant price increases as the original 25% tariff was supposed to be reduced to 15%, but it was instead increased to 40% in retaliation for the US’s latest list of tariffs for Chinese products.
In China, Tesla was doing fairly well despite the 25% import duties.
The California-based automaker has doubled its sales to over $2 billion in China last year and they by far lead foreign electric car sales in the country.
But now the higher prices are expected to affect its sales until they can establish local manufacturing capacity and avoid the tariffs altogether.
That was quite the ride. For a second, we thought that the trade discussions might actually result in opening up the car market, especially for electric cars, in China.
But it took a turn for the worse quite fast.
For the moment, Tesla is one of the most affected automakers since it exclusive imports its vehicles in the country due to its lack of joint-venture in China.
Though it looks like Tesla was also the only foreign automaker who held off long enough to announce plans to manufacture in China that it might be able to build a factory in the country without having to partner with a local company as the government has announced a change in the law when it comes to electric vehicle manufacturing.
Unless the trade war deescalates, that’s Tesla’s best hope for its future in the country.
We hear that an announcement might come quite soon as Tesla execs have been visiting Shanghai, which is where Tesla would be allowed to build its gigafactory in China.
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