By on August 30, 2019

Tesla Model 3, Image: Tesla

With a 25-percent import tariff looming like a hanging blade over U.S.-built vehicles in the Chinese market, Tesla has managed to side-step another sales-sinking levy: the country’s purchase tax.

At 10 percent, the purchase tax applies to most vehicle sales in that market, though the state exempts various domestic “new energy” (electric) vehicles from the added cost. As of Friday, Tesla vehicles, despite being manufactured in California, will join the ranks of these privileged automobiles. However, buyers hoping to realize the full benefit of the tax cut are out of luck.

Gaining exemption from the purchase tax will not save Tesla from the 25-percent tariff on U.S. vehicles that China plans to enact on December 15th. The tariff is a direct response to a U.S. threat — a tax-for-tax measure as the two countries engage in a trade war jousting match.

While Tesla vehicles (specifically, the Model 3) built at the automaker’s in-progress Shanghai Gigafactory would handily side-step the import tariff, that factory has yet to build its first vehicle. Its completion date is unknown, though CEO Elon Musk has previously claimed the facility will be up and running before the end of the year.

With tariffs looming, sticker prices are on the rise.

Due to the country’s falling currency, Friday also brought a price hike for all three Tesla models sold in the Chinese market. As reported by Bloomberg, the Model 3 sees a 2-plus-percent increase, with the sedan now starting at $50,900 for a base model. A Model S, now available only in top-spec guise? That’ll be $111,000. The Model X SUV sees its price floor rise to roughly $113,255. Motoring for the masses, these vehicles ain’t.

News of the purchase tax exemption saw Tesla shares briefly rise nearly 5 percent in pre-market trading. With the opening bell minutes away, the company’s stock is still up 3 percent.

[Image: Tesla]

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5 Comments on “Tesla Dodges Chinese Tax, Raises Prices...”

  • avatar

    When you work on cars these days, you see a lot of Chinese manufactured parts. And my take is that their quality is all over the map. From total dirtbag to world class, depending on who the parent company is and what systems are implemented for the workforce and processes.

    It will be interesting to see how a company like Tesla (that struggles with quality in their formerly world class under NUMMI US factory) does over there. I’m predicting trouble. Tesla seems very much like the Big 3 in the 70s, push it out the door, make that production goal, we’ll fix the bad ones with our Tesla Rangers.

    I’m not knowledgeable enough about the Chinese consumer to know what is acceptable. I suppose Tesla may be a perfect fit?

  • avatar
    SCE to AUX

    Sales tax on a car in PA is 6% – every time it is sold – unless you’re one of the many lucky people who lives in Allegheny County, and then you pay 7%. I’d like to see the mfrs fight that.

  • avatar

    It’s 8% here in Philly. When I got my Audi, I did not receive the tags for it in a timely manner, and it turned out that the out-of-state dealer had not charged me the correct percentage for a Philadelphia resident, so PA would not send the plates. The dealer was apparently too embarrassed to tell me of their mistake, but I just sent them a check for the difference – it was not like the dealer was making any extra money off of it.

  • avatar

    “Gaining exemption from the purchase tax will not save Tesla from the 25-percent tariff on U.S. vehicles that China plans to enact on December 15th. The tariff is a direct response to a U.S. threat — a tax-for-tax measure as the two countries engage in a trade war jousting match.”

    No. The 25% tariff is *NOT* in response to US trade fight, it predates Trump. China has had this large tariff for many years in additional to local-partner requirements.

    The case of Tesla is a poster child for China’s trade-war strategy. Sure we buy toasters from China the argument goes – US should specialize in advanced products. Tesla’s *are* in demand in China – and could compete in upper end of market, even with currency rates and US production. but essentially China forced China to build a factory in China. Also note China makes 60% of the world’s Li batteries but still hoovered up their own gigafactory as part of the deal.

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