Tesla announced on December 16 it is reducing prices on the Model S and Model X in China in response to China’s decision to roll back its 40% tariff on cars imported from the United States to the 15% level that was in effect previously. According to CNBC, the decision by Chinese authorities is temporary. The new rate will be in effect from January 1 until March 31. After that, we’ll see.
The two nations agreed at the G20 conference in Argentina earlier this month to put a halt to their tariff war for 90 days while they try to come to a long-term agreement on trade policies. It is still not clear what, if anything, the leaders of the two countries agreed to while in Argentina, other than a plan to keep talking.
The CNBC report says, “China accounted for 17.2 percent of Tesla’s total revenues in 2017, but only 6 percent in the third quarter due to the impact of the tariffs, [according to] CFRA analyst Garrett Nelson.” Tesla is pushing hard to get its new factory in Shanghai up and running as soon as possible to avoid tariff hassles with the Model 3 and the upcoming Model Y crossover.
As far as we know, the Model S and Model X cars will continue to be built exclusively at the Fremont factory in California, which means they will continue to be pawns in the tariff game. Elon Musk tweeted earlier this year that tariffs make sales in China like “competing in an Olympic race wearing lead shoes.”
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