Tesla slashes prices in China again, as trade war tariffs temporarily go down

Tesla’s prices in China have been on a rollercoaster this year due to Trump administration’s escalating trade war, but the automaker is a getting a reprieve as both sides seemingly agree to a cease-fire. 

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 today to reflect the change.

The price of the Model S was cut by as much as 105,000 yuan ($15,200) depending on the version.

The timing could also potentially help Tesla with the launch of the Model 3, which is expected to hit the Chinese market in late Q1 early Q2.

Regardless, Tesla is still moving ahead with its plan to start production at Gigafactory 3 within a year, which should enable the company to get around the import tariffs altogether.