Tesla Makes It Easier To Own Their EVs in China Despite Higher Tariffs

A man finishes charging his Tesla car at a charging point outside Tesla China headquarters in Beijing
A man finishes charging his Tesla car at a charging point outside Tesla China headquarters in Beijing, China July 11, 2018. (Photo: REUTERS/Jason Lee/File Photo)

The recent increase in tariffs between China and US markets is not stopping Tesla from making sure that their China customers are able to get the electric vehicle that they want. Elon Musk's company will even go as far as taking a financial loss per electric vehicle sold to ensure that the China market is able to get their Teslas according to a recent report.

Reuters recently covered the news that Tesla is willing to cut the prices for both its Tesla Model X and Model S electric vehicles in the China market despite the increase in tariffs for automobiles. According to the publication, Tesla sees the China market as the biggest auto-market for electric vehicles and the company is more than willing to cut its prices by 12 to 26 percent to make their vehicles more affordable.

Tesla makes it clear that they are more than willing to absorb a significant amount of the tariffs to ensure that the Tesla Model X and Model S are affordable for Chinese customers. Elon Musk's company deciding to absorb the tariffs is surprising considering that Tesla was one of the first American automobile manufacturers to raise their prices after the US-China tariffs were implemented earlier this year.

The news that Tesla will be absorbing the tariff costs of their electric vehicles in China comes along after Tesla has acquired manufacturing facilities in Shanghai. It seems that the electric vehicle manufacturer is looking forward to ensuring the affordability of Tesla vehicles for the China market without having to take the financial hit due to tariff costs.

While Tesla's gigafactory facilities in Shanghai will be helpful to ensure the availability of its electric vehicles to the China market, it seems that the first facilities will be focused on the production of the Tesla Model 3 and Tesla Model Y. If the Tesla Model S and Model X are yet to be produced in the new facilities, it seems Tesla is committed to ensuring their presence in the China market despite the long-term losses due to automobile tariffs for Tesla Model S and Model X orders.

With the Tesla Model Y still a yet to be released electric vehicle model, it seems that Tesla's China manufacturing facilities have at least until March 2019 before completion. Tesla has yet to comment on how the automobile tariffs between China and the US will affect Tesla's original projection of a November 2019 start of production.

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