Tesla receives tax exemption on all its cars in China as it increases prices

In surprising news for Tesla in China today, Tesla received a sale tax exemption for all its electric cars in the country, but it also increased prices at the same time.

The price increase was expected as the trade affects the exchange rate and requires adjustments, but the tax exemption certainly comes at a surprise.

China has a 10% purchase tax on cars, but the industry minister posted an update on their website to add Tesla’s Model S, Model X, and Model 3 to a list of exemptions.

Tesla shared the news on its official social media account in China.

The automaker said that buyers could now save up to 99,000 yuan ($13,957.82) on the purchase of a Tesla vehicle.

The sale tax exemption is more than negating the price increase, which is closer to 3% across Tesla’s lineup.

The Chinese government didn’t give a reason for adding the vehicles to the exemption list, but it appears to be an added EV incentive that Tesla generally didn’t have access to in the country because it imports its vehicles from the US.

Tesla is set to start Model 3 production at Gigafactory 3 in Shanghai later this year, but the more expensive variants of the vehicle, as well as Model S and Model X, are still going to be imported from the US.

The new incentive also comes as Elon Musk is visiting Shanghai and meeting with government officials.

Electrek’s Take

This is a great surprise.

I thought that Tesla had mostly missed the train when it comes to major EV incentives, which are starting to phase out in China, but a 10% sale tax exemption is not bad at all.

Every small price movement downward opens up access to another fraction of the population and with the Chinese market being so big, this small fraction may represent a lot of volume.

It’s likely going to help Tesla stay strong in the market until they can start Made-in-China Model 3 deliveries.