Tesla Now Tax-Exempt In China For Its Gigafactory 3 Facility

FILE PHOTO: A Tesla charging station is pictured during the media day for the Shanghai auto show in Shanghai, China April 16, 2019.
(Photo: REUTERS/Aly Song/File Photo)

Tesla could not seem to easily get the nod of regulators from its own soil when it recently asked to be exempted from taxes on China-made parts for its Model 3 electric car, but its big boss Elon Musk got lucky somewhere: China.

The tax exemption Musk and his team of engineers managed to get from Chinese economic officials is from a 10 percent tariff on purchases, based on reports by CNN.

Part of China's protocol is to add auto manufacturers to their master list if they build cars that use new types of energy, as electric vehicles do. Tesla operates 24 production lines in mainland China.

Nearly three dozen carmakers comprise the list, most of which are partnerships between a global automaker and a local Chinese company, but Musk is changing the ballgame by becoming the only US-based firm that has no ties with a domestic partner on the list.

China's approval for Tesla to be spared from the 10 percent government tariff on car parts and sales is considered a victory of sorts for the Palo Alto, CA-headquartered energy and car giant, bypassing economic frictions with the US after Musk's recent visit to China.

In June, Musk divulged that his company plans to build 3,000 Model 3 EVs (electric vehicles) per week at its sprawling Gigafactory in Shanghai once assembly and operation are in full gear.

By the middle of August, Musk hinted on social media that progress on the Gigafactory was moving positively. He reiterated his message when he visited China: "It was mind-blowing", he said, pointing out that "everything is coming together... a good story for the world to see the progress China can make."

Tesla's Gigafactory 3 will be hiring skilled personnel, especially engineers. The project is in all in conjunction with the American company's much-hyped production of its electric-powered cars outside US soil for the first time.

Tesla's tax exemption affects all its models sold in China, according to economic officials Friday on its website. Meanwhile, Tesla's stocks soared nearly 5 percent moments after the opening bell on Wall Street, Friday.

The tax exemption also sends a message that China's car industry - the largest in the world - welcomes fair competition, Yale Zhang, AutoForesight managing director, disclosed.

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