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Class Editori News

Custom duties require Tesla to raise the price of Model 3 in China

September 02, 2019


Abstract : The increase is currently limited to a little more than a thousand dollars, for a car that costs just over 50 thousand dollars.

MILAN, Aug 30 (Class Editori) - Tesla raised the prices of the Model 3 car in China in view of the new Chinese duties on imported goods from the US, thus increasing the pressure on the construction of the new production plant in Shanghai.

The price of an imported Model 3 went from 49,750 to 50,870 dollars. In December, China will apply higher tariffs on cars produced in the United States, which will rise from 15% to 40%. Tesla prices have been fluctuating in China last year due to trade tensions between Washington and Beijing. The Model 3 produced in China will avoid the problem and will have a lower price of 45.860 dollars.

Yesterday the CEO Elon Musk visited the plant in Shanghai, according to some photos circulated on social media, and stressed the speed with which construction work is proceeding. The plant received local government certification this month, a sign that the first phase of the work is complete.

According to analysts, the Chinese production site will cost 2 billion dollars. Tesla said it was on track to start production this year and to achieve large-scale production in 2020.

Starting and increasing local production is only the first of the challenges that Tesla is facing in China. According to analysts, selling enough electric cars to make a profit could be even more difficult, considering the weakness of the automotive market and the many producers of local electric vehicles, which are struggling to survive.

“I don't think companies will be able to make money selling electric cars over the next two or three years, whether they are start-ups or Tesla,” commented Sandford C. Bernstein's analyst Robin Zhu.

In July, for the first time in two years, the sale of new electric vehicles fell by 4.7%, to 80,000 units. Until now the electrical had been spared from the weakness of the sector. At the end of June, however, a new subsidy scheme came into force, with stricter rules and requirements for electric vehicles. This initiative has caused a weakening of the demand, with buyers who hastened to go to dealers before the rules were tightened.

Considering the automotive sector in general, the weakening of consumer sentiment, due to the commercial clash between the United States and China and the uncertainties about the economic prospects of the latter, the sector has slowed vehicle sales since the middle of last year year.

The prolonged decline is having repercussions on local producers. Carmakers like Geely and Great Wall are cutting expectations on profits and turnover. Already at the beginning of August, Byd, the largest local manufacturer of electric cars which this year is about to sell more ecological vehicles than fossil fuel cars, had announced a 38% drop in sales on June and a 12% decline on the same period of the last year.

At the beginning of the year, China presented a series of measures to ensure stable growth of domestic consumption in 2019. According to the plan, the government has set itself the goal of replacing cars, especially in rural areas, a measure that will accelerate market development of used cars and adjust the subsidies to stimulate sales of new energy vehicles (Nev). Measures that, however, have not impressed, in particular because have not been accompanied by less rigid rules for the release of the plates in the big cities squeezed by pollution.

The traditional car market is, on the other hand, suffering by 15-20%, as confirmed by the figures recently disclosed by Saic Motor Co of Shanghai, one of the largest national producers in joint venture with Volkswagen and General Motors, whose shares are one of the blue chips in the Chinese list in Shanghai.

The company's sales in the first half of the year fell by 16.2% on an annual basis, to 2.94 million units, with a record loss of turnover for the Shanghai General Motors Wuling joint venture, down 29% while Saic Vw lost something less than 10%. According to data from the China Association of Automobile Manufacturers, last May, the domestic car market was down 16.4% with 1,913 vehicles sold in the whole month.

(Source:Class Editori)

Notice: No person, organization and/or company shall disseminate or broadcast the above article on Xinhua Silk Road website without prior permission by Xinhua Silk Road.


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