Trade War Increases Tesla Prices By Over $20,000 In China

Trade War Increases Tesla Prices By Over $20,000 In China

The Tesla Model X is now priced at the equivalent of $140,100, much more than the $117,100 it was sold for previously. That was more than double the USA level of just under 200,000.

Tesla did not respond to a Reuters request for comment.

The company had only just cut its prices in China in May after Beijing announced it was slashing tariffs on vehicle imports from 25% to 15%.

The deal comes in the midst of an increasingly bitter trade war between the United States and China. Tesla, which said it expects to increase its manufacturing rate to 6,000 Model 3 per week by late next month, told BI that every vehicle goes through "rigorous quality checks, including brake tests". The deal Tesla was trying to strike with local government needed to both allow the factory to be built and operate, but also keep tariffs to a minimum.

For Tesla especially, rapidly burning cash and struggling to turn a profit, China is key. Revenues in the country doubled previous year to more than $2 billion, accounting for nearly 20%of the company's total. China has long pushed to capture more of the talent and capital invested by global automakers in advanced electric vehicle technology. "This will certainly not be good for consumers or for Tesla's sales in China", said Bill Russo, founder of Shanghai-based consultancy Automobility.

Tesla shares rose 1.5 percent in early USA trading, even as some analysts questioned where the money-losing company will get the capital required to build and staff such a large plant. Russo said NIO's new ES8 SUV has been positioned as a "Tesla-fighter".

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A factory in China would also allow Tesla to operate free of various tariffs and other current and future trade measures between China and the USA, which are now moving in the direction of a trade skirmish if not an outright trade war.

Other automakers long ago capitulated to China's strict foreign ownership requirements for auto factories, requiring United States companies to establish 50:50 joint ventures with local firms to build cars in the world's largest auto market.

Tesla sold 14,779 vehicles in China previous year, according to data from LMC Automotive. The South Carolina BMW plant, the company's largest in the world, is also the largest source of USA auto exports.

Tesla released its eagerly-anticipated second quarter report on vehicle production and deliveries today, as it passed a crucial production milestone for the Model 3 sedan. "We are now calculating related necessary pricing increases", the company said in a statement.

Musk has also said the company will reveal plans near the end of 2018 to build a factory in Europe. Musk, 47, said more than two years ago that he expected Tesla to produce more than 500,000 vehicles in 2018 at its lone car-assembly plant in Fremont, California, but the company is well off that pace because of the Model 3's slow start.

The plant is not expected to reach full capacity for four to five years.