Tesla lowers prices in China as trade war dents demand
BEIJING Tesla Inc. lowered the prices of the Model S and Model X in China, seeking to boost sales after the trade war with the U.S. hit demand in the world’s biggest car market.
Prices for the models were lowered by 12 per cent to 26 per cent, the company said in a statement Thursday. The Model S sedan now starts at 782,900 yuan (US$113,000) while the Model X sport utility vehicle is priced from 861,800 yuan, according to its website.
“We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China,” Tesla said in a statement sent to Reuters.
China boosted the duty on American vehicles to 40 per cent in July as part of a tit-for-tat trade war.
The tariff has had an impact on Tesla’s sales in China, the company said when reporting third-quarter earnings in October.
The electric-car maker is working on plans to start a partial production of its Model 3 vehicle in China next year, chief executive Elon Musk said on the company’s earnings call.
Tesla also said a dual-motor allwheel drive version of its Model 3 will be priced at 540,000 yuan in China, and the performance version will cost 595,000 yuan.
The move comes amid severe trade tensions between China and the United States, which has seen extra tariffs slapped on U.S. imports into the country, including automobiles, hurting Tesla, which imports all the cars it currently sells in the market.
The move marks a shift from July when Tesla was one of the first U.S. carmakers to raise prices in the market in response to tariffs. The firm hiked prices then on its Model X and S cars by about 20 per cent.
Tesla warned last month it was facing major problems with selling cars in China due to new tariffs that would force it to accelerate investment in its first overseas Gigafactory in Shanghai.
The carmaker last month secured the site for the facility, which will help it avoid steep import tariffs.
The firm, which recently launched pre-sales of its new Model 3 car in China, added in its statement that the car’s price tag would start from 540,000 yuan (US$77,928.83) for a dual motor all-wheel drive version, and 595,000 yuan for a performance version.
Before the price hike in July, Tesla had lowered prices on its models in China in May, after Beijing had said it would cut import tariffs for all auto imports.