Tesla gets exemption from 10% tax in China
TESLA won exemption from a 10 percent Chinese tax on automotive sales, sidestepping trade tensions with the US following chief executive Elon Musk’s visit to the country.
The exemption, which typically is reserved for domestic makers of electric vehicles, affects all Tesla models sold in China, the nation’s industry ministry said on Friday on its website. The electric vehicle (EV) maker’s shares jumped as much as 4.8 percent shortly after the open of regular trading.
China’s concession to one of America’s most high-profile companies comes amid heightened uncertainty as to where the trade war between the two countries is headed.
A week ago, President Donald Trump ordered US companies to immediately begin looking for alternatives to China, only to later suggest that tensions were cooling.
The exemption also sends a signal that the Chinese car market, the world’s biggest, is open to competition, said Yale Zhang, managing director of AutoForesight, a Shanghai-based car consultancy.
“It clearly shows the state’s attitude in introducing a strong competitor in new-energy vehicles,” Zhang said. “For those domestic EV makers, now if you don’t run fast enough, you’ll be beaten up.”
During a two-day visit, Musk made an appearance at the World Artificial Intelligence Conference in Shanghai, debating Alibaba Group chairperson Jack Ma onstage.
He also spoke with local authorities and toured a new gigafactory being built about 70km away from the city centre. That was followed by a meeting with China’s Minister of Transportation, Li Xiaopeng, on Friday in Beijing, according to government news reports.
A Tesla spokesperson didn’t respond to a request for comment.
The stock’s rise to as high as $232.44 (R3 520) on Friday was the biggest intraday jump since July 3.
The sales-tax reprieve could partially offset retaliatory tariffs that may be put on Teslas and other US-built cars later this year.
China announced last week that it would increase tariffs on American cars by 25 percentage points to 40 percent on December 15.