Tesla hikes prices in China after tariffs hit United States cars

Tesla hikes prices in China after tariffs hit United States cars

Tesla hikes prices in China after tariffs hit United States cars

For Tesla especially, rapidly burning cash and struggling to turn a profit, China is key. Amidst the overwhelming number of reservations it received for the Model 3, Tesla embarked on what could be called an "anti-selling" period for the Model 3, with Elon Musk highlighting the car's extended wait time and comparing the Model S favorably against the vehicle.

"Last year, we announced that we were working with the Shanghai Municipal Government to explore the possibility of establishing a factory in the region to serve the Chinese market", Tesla said in a press statement.

Increasing prices could threaten its position in such an important market. Bloomberg reported earlier that Musk, Tesla's chief executive officer, would be in the city for an event with the government on Tuesday. Analysts have predicted it will raise capital to fund a list of new projects, including launching an electric semi truck, a pickup truck, a compact SUV and new battery and vehicle production facilities that Musk has proposed for China and Europe.

Tesla and Shanghai authorities did not immediately respond to requests for comment.

But Tesla and producers including GM and Nissan Motor Co. had been reluctant to transfer manufacturing to the country due to the requirement to share technology with Chinese partners that might become rivals.

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Tesla released its eagerly-anticipated second quarter report on vehicle production and deliveries today, as it passed a crucial production milestone for the Model 3 sedan.

While Musk, 47, said in May 2016 that he expected Tesla would produce 500,000 vehicles a year by 2018, the company has repeatedly fallen short of his manufacturing goals with the Model 3 sedan. The WSJ reports that China is Tesla's second-biggest market outside of the USA and that it sold about 17,000 cars there in 2017 compared to the 50,000 stateside.

Tesla will be allowing people in the US and Canada to bypass a reservation process for the Model 3, according to a report.

Prices of Tesla vehicles sold in China have increased by over $20,000 thanks to the ongoing trade war between the United States and China. Most big American auto companies avoid hefty import tariffs by making many of their vehicles for the Chinese market inside the country through joint ventures with local partners. Musk plans for the Fremont factory to produce 450,000 cars or more at full capacity. It's been an idea Musk has mentioned to investors since previous year. A plant in China also reduces shipping costs and potentially makes sourcing components more economical. Musk's company got around the encouraged/required partnership with a local Chinese company by opting to build in Shanghai's free trade zone. 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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