Trade War Increases Tesla Prices By Over $20,000 In China

Image Source CNN

Image Source CNN

A 25 percent Chinese tariff on US-made cars recently forced Tesla to raise the Chinese price of the Model S and Model X. Having a Chinese factory would help Tesla avoid these taxes, as it could manufacture cars in China and then sell the cars directly to Chinese consumers-or to customers in Asian countries with good trade relationships to China. That's impressive for such a new vehicle company, but Tesla just signed a deal in China allowing production to increase by another 500,000 a year.

On Tuesday, Tesla CEO Elon Musk was in Shanghai to announce plans for the company's first factory in China.

In a statement from the Shanghai Municipal People's Government that was translated into English and which Tesla provided to this news organization, Musk said the Shanghai operation "will be a state-of-the-art vehicle factory and a role model for sustainability".

Tesla's Chief Executive Elon Musk attended the signing, according to a Reuters witness.

Tesla analysts have noted that the Fremont factory has no room to add an additional assembly line to build the planned Model Y SUV, which Musk has said is due in late 2019 or early 2020.

Tesla did not immediately respond to requests for comment.

Tesla shares rose 1.5 percent in USA trading even as some analysts questioned where the money-losing company will get the capital required to build and staff such a large plant. More than two years after the first reservations were taken for the least expensive Tesla vehicle, Elektrek reports the Model 3 design studio should be available to everyone starting on Tuesday.

In what is Tesla's biggest step yet into an overseas market, the electric carmaker on Tuesday inked a deal to begin construction of a manufacturing plant in China capable of producing 500,000 cars a year.

Tesla's price increases come as it plans to build a factory in Shanghai to serve the Chinese market.

Citing Tesla's lower than expected Q2 delivery numbers and higher costs, Brinkman lowered Tesla's EPS forecasts saying he now expects a Q2 loss per share of $2.80, compared with his previous estimate for a $2.45 loss per share. Tesla builds its electric sedans and SUVs at its factory in Fremont, Calif. and ships them to China, which subjects the vehicles to an import tariff. China accounted for 17 percent of Tesla's 2017 revenue, according a filing with USA regulators.

BMW exported about 81,000 cars from a plant in SC to China a year ago, generating about $2.4 billion in sales.

The youngest publicly held US automaker is looking to expand its capacity and more efficiently reach global markets. Work toward getting the factory built has gained urgency as Donald Trump engages in a trade war that's ensnared imports of the company's vehicles into China. That gave it about 3 per cent of the nation's battery-powered electric-vehicle market, placing it as the No. 10 brand in that segment.

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