Tesla plans to raise the price of its cars in China in the context of the US-China bilateral trade war that is causing the auto industry to struggle.
A sales representative and an anonymous employee of Tesla revealed that the US electric car manufacturer will raise the prices of its vehicles in the Chinese market next Friday (August 30), earlier than with its previous intention. In addition, the automaker is considering another price increase in December this year.
At the same time, the source added that Tesla will try to move more cars to China before the new tariff policy is introduced later this year. The move comes after China’s Ministry of Commerce announced it would restore 25% tax on cars and 5% for auto parts imported from the US last week. However, this plan has not yet been made public and a representative of Tesla declined to comment on the issue in an interview with Reuters.
Tesla is one of the most difficult names due to the tension in the US-China trade that is “escalating”. The introduction of the new tariff policy has had a direct impact on Tesla as the electric car company has not yet made a production in China. Besides, the yuan is weakening, falling to its lowest level in 11 years, causing Tesla’s earnings in the Chinese market to drop significantly.
Reportedly, Tesla is building its first overseas factory near Shanghai, China and is expected to start manufacturing cars here by the end of 2019. Currently, the automaker has entered The Model S, Model X and Model 3 models from the US enter China. Besides, Tesla also agreed to buy batteries from LG Chem Ltd.. of Korea for installation of vehicles manufactured in this market.
However, Tesla’s race in the world’s most populous market is certainly not easy when its electric car rivals in China have certain advantages in price because they are not subject to tariffs and get preferential policies from this government.