Tesla China reduces price of Model 3 in trade war cease fire

It looks like there’s at least going to be a “cease fire” in the US-China trade for the first quarter of 2019 and it’s now affecting the price of the Tesla Model 3.

Tesla is reducing the price of Model 3 by over 7% in the country.

Earlier this year, Tesla CEO Elon Musk went directly to Donald Trump to address issues of US-China car trade.

At first, it seemed to actually be working as the president included automotive products in the discussion.

Back in May, Tesla lowered its price by 40,000 yuan to 90,000 yuan(~$6,000 to ~$14,000 USD) depending on the model in China.

The automaker was doing it in preparation for a planned reduction of the 25% import duties that Tesla vehicles are subject to in China down to 15%.

But it backfired as the trade war started to escalate and in July, Tesla had to increases the price of Model S and Model X by over $20,000 in China due to new trade-war tariffs.

The company became subject to up to 40% in import duties for the vehicles it delivers in the country from California.

Last month, Tesla again reduced the prices of its vehicles in China by 12 to 26%, but the automaker said that it was absorbing the difference this time.

But the automaker’s timing was good since Trump said that China agreed to lower tariffs on US cars last week.

While they are not officially lowering the tariffs, China confirmed today that they will “suspend the additional tariffs on US vehicles and auto parts for three months starting January 1, 2019.”

It means that the tariffs should, at least temporarily, go back down to 25% for the first quarter 2019.

Even though Tesla had already reduced the price of Model S and Model X before the announcement, they adjusted the price again to reflect the change.

Now it’s Model 3’s turn.

This weekend, Tesla has adjusted the price of Model 3 in China to now start at 499,000 yuan (~$72,000).

When Tesla first opened orders for Model 3 in China in November, only the Long Range all-wheel-drive and Performance versions were available and they respectively started at 580,000 RMB (~$83,500 USD) and 690,000 RMB ($99,400 USD).

In the US, The Model 3 Long Range all-wheel-drive starts at $53,000.

Tesla has a ‘fair price’ policy that means it aims to sell its vehicles for the same price everywhere after accounting for local import duties and transportation costs.

The automaker is expected to start Model 3 deliveries in China around the end of the first quarter 2019.