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November 23, 2018

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Tesla announces huge price cuts in China

US electric carmaker Tesla has slashed the prices of its Model X and Model S cars in China, thus absorbing a significant part of the tariffs and making cars more affordable to Chinese customers.

The price of Model S 75D has been cut by about 104,700 yuan (US$7,500) to 782,900 yuan, while Model X P100D is 186,500 yuan cheaper, with the new price set at 952,500 yuan, the company announced on its official website.

In July, Tesla was among the first to raise the price of its cars amid trade frictions between China and the United States. As the US imposed duties on Chinese imports, China hit back by raising import duty on US-made cars by 40 percent from 15 percent.

Tesla raised the price of its Model X and S cars by about 20 percent as it imports all the cars it sells in the Chinese market.

The price cuts announced yesterday suggest that the carmaker is absorbing part of the tariffs in an attempt to boost sales. China is the largest auto market as well as one of the leading countries in the development of electric cars.

Cui Dongshu, secretary-general of the China Passenger Car Association, said that Tesla’s sales in China declined in the third quarter and in October, largely due to the higher prices. “By bringing the prices down, its market performance may fare better in the coming days,” Cui added.

Besides cutting the prices of Model X and Model S, Tesla also lowered the price of its Model 3 car, a sedan that will hit the market next year.

Model 3 Dual Motor All-Wheel Drive will start from 540,000 yuan and Model 3 Performance will start from 595,000 yuan.

Tesla has started taking orders for its Model 3 sedan in China for a deposit of 8,000 yuan. The company said Model 3 only accepts online booking. On November 16, the first batch of Tesla Model 3 customers in China received a confirmation e-mail from the US electric carmaker. It said that the price of Model 3 Dual Motor All-Wheel Drive was 588,000 yuan and Model 3 Performance was 698,000 yuan.

Li Yanwei, an analyst at the China Automobile Dealers Association, said that “with the earlier price of 588,000 yuan, Tesla’s Model 3 was more expensive than Porsche Macan, Mercedes-Benz GLC, BMW X3, BMW 5 Series and Mercedes-Benz E-Class, which is not competitive.”

In the United States, the price of Model 3 Rear-Wheel Drive is US$31,700, Model 3 Dual Motor All-Wheel Drive US$38,700 and Model 3 Performance will start from US$49,700. The prices include potential incentives and gas savings, according to Tesla.

The US electric carmaker said earlier this month that it plans to produce 3,000 Model 3 sedans per week in Shanghai when the plant becomes operational. Tesla said it would invest up to US$6 billion over the next two years.

Tesla signed an agreement with Shanghai government in July to set up a wholly-owned factory in Shanghai.

The first batch of electric vehicles will roll off the production line in three years.


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