Teslas in China will finally have to deal with ever escalating tariffs being imposed during this trade war between the US and China.
It was looking good for Tesla, who benefited from a 40% reduction in import duties earlier in the year, right in time for the Model 3. The prices of Model S and Model X were decreased by 40,000 yuan to 90,000 yuan (~$6,000-$14,000) respectively in May.
Tesla was looking forward to making a big push in China along with the coming of a local manufacturing plant in China.
An announcement about a Tesla factory was expected soon as the automaker set up a new company in Shanghai’s Free-Trade Zone.
The plan was probably to ride it out but this last weekend we saw the prices of Model S and Model X increase significantly. The prices shot up by 150,000 yuan to 250,000 yuan (~$22,600 to ~$37,600) respectively. The original 25% import tariff was supposed to be cut to just 15%. But instead, thanks to the current trade war, it had rocketed up to 40%.
Tesla has been doing well so far in China, doubling its sales to over $2 billion last year. Teslas are definitely a status symbol to the population, leading foreign electric car sales in the country. What is a problem is that Tesla was one of the last automakers to announce plans for a factory to be built in China. This decision might come to haunt them as companies like BMW, Volvo, and Mercedes-Benz already have factories in the country.
Tesla’s best bet right now is to have this trade war fizzle out or have their factory come into operation as fast as possible.