Tesla Lowers Prices in China with the Reduction of Auto Tariffs

Tesla Inc. will lower its price in China immediately the country reduced its tariff on most imported cars on May 22.

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The Customs Tariff Commission of the State Council in China announced the reduction of import taxes to 15 % on complete vehicles. Tesla, the electric car brand, has initiated a price reduction strategy in response to the tariff reduction, as NetEase Finance reports.

According to insider information, Tesla Inc. will have a price cut on all its vehicles after July 1 of this year. The price cuts range from 40,000 yuan ($6,275) to 90,000 yuan ($14,116) depending on the model with the cut on the Tesla MX 100D even surpass 90,000 yuan ($14,094).

It is important to note that as Tesla has no local distributors but uses direct sales channels in China, all the reported price cuts are simply estimates according to the insider. For final figures, please see the official numbers released by Tesla China in the near future.

In addition, it is to note that the price cut will only apply to vehicles that landed in China after the said date as Tesla ships all of its the automobiles from abroad. This means, not all cars purchased on July 1 will be eligible for the price cut.

Reduction of auto tariffs

In addition to reducing the tariff on whole cars from 20% or 25% to 15%, the Customs Tariff Commission of the State Council will also reduce the tariff on automobile components and parts from between 8% to 25% to 6%. This is the 10th time China has reduced tariffs on import auto in the past 30 years with the latest one in 2006.

Elon Musk, Tesla’s CEO, previously said that China’s import tariffs are too high. “A Chinese car only needs to pay a 2.5% tariff when it enters the market in the US, whereas a U.S. car needs to pay a 25% tariff. That is a tenfold difference.”