Tesla complains about the difficult conditions of doing business in China: because of duties on imports of American cars, Tesla electric vehicles in the Middle Kingdom cost 60% more than competitors.
The trade war between the United States and China undermines Tesla’s competitiveness in the market, said an American car manufacturer. During the announcement of deliveries in the third quarter, Tesla reported that it was able to significantly increase the supply of Model S and Model X vehicles, despite the headwinds that they faced due to the ongoing trade tensions between the US and China.
The countries imposed mutual duties on goods valued at $50 billion. Vehicles and spare parts appeared on both lists. In addition, it is planned to introduce additional tariffs. China raised its import duties on American cars to 40% in just a few days after a wide reduction in duties on foreign-made cars and parts from 25% to 15%.
The company plans to supply about 100 thousand electric vehicles Model S and Model C in 2018. Tesla claims that the company requires 50-60% more investment for the production of electric vehicles than for exactly the same car produced by Chinese companies. Nevertheless, the company notes that the Chinese market is the largest in the world for manufacturers of electric vehicles.
Tesla sales in China were relatively good before the increase in duties. In 2017, China accounted for about 17% of Tesla’s revenue. Car sales amounted to about 15 thousand cars for $2 billion. Now, as expected, higher prices will affect sales of the Californian automaker until it starts local production.
Tesla said it is accelerating the construction of its plant in Shanghai to try to minimize the impact of duties. Recall that the company has entered into a preliminary agreement with the Shanghai government on the construction of a plant with a capacity of 500 thousand cars per year in the region.