Tesla Hikes Up Prices Of Model S & X Substantially In China

Tesla

JUL 9 2018 BY VANJA KLJAIC 18

Last weekend saw major increases in Tesla Model S and Model X prices

It seems the trade war with China finally caught up with Tesla. For a while, it looked like the U.S. based automaker would avoid the harsh reality of increased prices, stemming from the high import tariffs imposed by the Chinese government. The same tariffs that have been headlining both the US and Chinese news channel reporting these past few days. While Tesla clearly won’t be the only carmaker impacted by the import duties, most other major car makers have already established their local presence in form of Chinese production facilities for their best selling models in the country.

Just recently, the Tesla was preparing a massive push within China. Coming as a direct result of a 40% reduction in import duties earlier this year, which arrived just in time for the Model 3 launch date. During that time, the prices of the Model S and Model X were decreased by a pretty appealing 40,000 to 90,000 yuan (~$6,000 to ~$14,000 USD), but it all came crashing down last weekend.

For Tesla, the plan was simple: ride the wave of reduced import duties until they could open up a local Tesla factory in China. The automaker even set up a new local company in the Shanghai Free-Trade Zone, but the timing was off and the factory is still a long way from coming online.

Elon Musk, Tesla Motors CEO, confirmed the Chinese factory story during a Q1 2018 earnings call. It was stated back then that the next Tesla Gigafactory will be opened in China. But it seems that the immediate effect of the import tariffs is hitting Tesla hard and will continue to hit hard until either Trump eases up his hardline policy or until the Chinese factory becomes operational. Whichever comes first. Meanwhile, the prices of Tesla vehicles are skyrocketing.

This last weekend saw the Tesla Model S and Model X prices increased by 150,000 yuan to 250,000 yuan (~$22,600 to ~$37,600), respectively, depending on version. This represents a significant price hike when compared to the percentages the automaker was relying upon: the original 25% import tariff was supposed to be cut to just 15%, but in turn, thanks to the emerging trade war between the United States and China, it skyrocketed to a whopping 40% for their vehicles.

Even with 25% import duties, Tesla Motors was doing well in China

Last year, the California-based carmaker managed to double its sales to over $2 billion in China. They even led the foreign electric car sales in the country, despite the likes of BMW and Volvo having their own, local factories there. Overall, Tesla represents a highly-coveted luxury status item that the sprawling Chinese upper middle-class aims for. While the tariffs may impact the overall sales volume, we don’t expect Tesla to suffer that hard until their local Gigafactory comes online. After all, customers that are buying status symbol goods – like the Model S and Model X – won’t be that much phased by the increased prices.

Tesla was among the last of the major car makers to announce plans to manufacture in China. With recent events unfolding, that might of been a poor decision after all. Tesla had a series of bad decisions and misderected actions in China, but the company managed to recover from all of them. We see no real threat to their expansion in the said country, barring some rather unexplicable move by the current POTUS, that is.

Source: Electrek

Categories: China, Tesla

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18 Comments on "Tesla Hikes Up Prices Of Model S & X Substantially In China"

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David Green

This trade war really makes it tough to predict any results looking forward. :(~

Miggy

Could be a good thing for those waiting for their Model 3.
A lot of the buyers from China may now think about cancelling their order.

Hauer

Not a lot of Model 3 sales expected from US production.

Yes… many expected from US production. China was one of the positive surprises in the Model 3 reservations. And there were even talk that deliveries might even start in China before the European deliveries.

John Ford

Hey Vanja, I like this line “and will continue to hit hard until either Trump eases up his hardline policy” for it’s utter divorce from reality. You do realize that it is CHINA imposing the increased tariffs over past levels right? Imported autos into China did suffer a 25% tariff until this past May. Imported autos into the US were charged 2.5%. A 10X difference. Seems fair to you I suppose? Then China offered to reduce them to “only” 15% in May. Wow. Still 6X higher than the US charges. So Trump raises our because they did not do enough, and you report it as Trump has the hardline policy?
Take your head out of your Tofu and Ramen and look at things objectively. Alas, too much to ask I’m sure.
Why don’t you write an article outraged that China has increased their Tariffs to levels even higher than the previous 10X of US levels and that they are hurting US companies like Tesla?

Pushmi-Pullyu

It’s not the fact that the Cheeto-in-Chief decided to start a trade war with China that makes his policies destructive and stupid. He actually had a good point about China being the one which started it, a long time ago. (No doubt someone came up with that excuse for him; he’s not even remotely smart enough to think of it on his own.)

No, the problem is that — as is typical for him — he went about it in the most strategically stupid way possible. The way to win a trade war is by several countries allying together to impose economic penalties on one single other country. (That’s how we forced Iran to freeze its nuclear program… something else the Cheeto-in-Chief has stupidly blown up.)

One of the first things that the Big Cheeto did, after taking office, was to remove the U.S. from the TPP — the Trans-Pacific Partnership trade agreement. That was an alliance with exactly the Asian partners we need for an effective trade war against China. Exiting from the TPP has left the U.S. acting alone in this trade war, which means any tariffs we impose on China hurt our economy just as much as China’s.

Pushmi-Pullyu

Well, that is disappointing news, but hardly unexpected. This is going to be a serious hit to Tesla’s sales so long as the Cheeto-in-Chief is allowed free rein to continue his highly destructive occupation of the White House. Will Tesla be forced to raise its domestic prices, too?

Here’s hoping the wannabe dictator is removed from office very soon, by any means necessary. The sooner we can start restoring sanity, honesty, and stability to the White House and its administration, the better.

E(V)quality

With import taxes increasing, they and everyone else will eventually have to increase prices. By how much is the most important question, but you can be sure that steel and aluminum prices will increase, even if they only have American suppliers, since they can suddenly ask a lot more for their products. And they actually have to, since they might be loosing business outside of the US.

The other big question is how much the trade war will effect Tesla’s bottom line. If it gets really bad, then they will have to make up for the lost sales with increased profits in the US.

In the end a trade war is never good, for no side. But since China is the prime EV market, and Tesla was probably planning for good sales over there, this will have a negative affect on their sales and potential profitably and therefore the speed at which they can continue to grow. And it will be an even bigger incentive to move production there ASAP.

If that will help American jobs? Probably not…

windbourne

Hopefully, this will lead tesla to focus on manufacturing in EU, instead of CHina. There is a lot more sales potential in Europe, then in China.

David Green

What? That is the most ill advised comment of all time, China is by far the biggest car and EV market in the world, and also has the best base for manufacturing, rules that are written in pencil, and a huge workforce. Tesla would be nuts to expand in Europe before China.

EJS

Norway had the 2nd highest Tesla sales for years, not China. Europe is by far the most productive and advanced place for car manufacturing, Tesla will find a much better trained and productive workforce than in China, and solid IP protections within the EU legal framework. Expect all of Tesla’s IP and technologies to be stolen in China a second after being implemented there.

R.S

Europe is definitely important, but China is still more important. Especially since Tesla has a lot of room to grow. In Norway they can basically just steal their own sales, the Chinese car market is growing and switching to EVs at an impressive rate.

Hauer

No brain to use?
No facts allowed in your thinking?
Wow.
Put on your chinese maga hat.

Hauer

Tesla did NOT „hike up“ the price.
Tesla just added those tariffs caused by the 🍊 🦍.