Tesla takes Price Cut in China to absorb Trade War effect

Tesla takes Price Cut in China to absorb Trade War effect

Apart from lowering the prices of its two flagship vehicles, Tesla also opted to adjust the price of the Model 3, which is now open for orders in the country.

US automaker Tesla Inc.is slashing prices of its Model S and Model X cars in China by as much as a quarter to absorb a large part of the impact of tariffs brought about by the deepening China-US trade war on customers.

"We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China". China has levied extra tariffs on US imports, including automobiles, in a blow to Tesla, which imports all light vehicles it sells in the market. The model's performance version will sport a price tag of 595,000 yuan.

American-made cars now face a 40 per cent import duty after Beijing imposed an additional punitive tariff of 25 per cent in July.

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China is the largest vehicle country in the world, so to completely abandon the sale of cars, the heads of Tesla have no right to, as it will lead to serious economic problems, including within the company. The first cars are expected to roll off the production line in around three years, according to the carmaker. The firm will be investing Dollars 2 billion into the plant.

But the new-energy vehicle segment is seen as a bright spot in the country's auto industry. The publication points out that Tesla's practice of highlighting savings first before revealing the actual retail price is controversial because different potential Tesla owners may end up with differing gas saving rates. The company is also looking to expand its presence in the country with an 860,000 square meter Gigafactory in Shanghai capable of producing 250,000 vehicles annually.

The stock fell 2.7% to US$338.19 on Thursday.

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