Tesla will reduce the prices for its Model S and Model X cars for the Chinese market by 12 to 26 percent, the company told Reuters. The move is an attempt to counter the negative effects on sales due to the U.S. tariffs on Chinese goods that prompted retaliatory tariffs hurting U.S. companies operating in the Asian economy.
“We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China,” the EV maker said in a statement.
Reuters recalls that Tesla was among the first companies that had to raise their prices for Chinese buyers following the first exchange of tariffs between Washington and Beijing. At the time, in July, the EV maker said it would hike prices by 20 percent. Yet the effect on sales was pretty quick and Tesla last month warned it was having trouble selling cars in China as more tariffs mounted. The company also said it will have to speed up the construction of its first gigafactory abroad, in China, to reduce the adverse effects of tariffs.
China is a key market for Tesla as it is for all other carmakers, especially those with EVs in the lineup. The company last month said it was launching pre-orders for its affordable model, Model 3, in Europe and China before the end of this year and added it was considering moving the production of some Model 3s to China next year.
“We are aiming to bring portions of Model 3 production to China during 2019 and to progressively increase the level of localization through local sourcing and manufacturing,” Tesla said in its third-quarter earnings report. The cars manufactured in China would be sold in China, Tesla also said. The company turned into the black in the third quarter of the year, much to the surprise of everyone after years of losses and despite its production problems with the Model 3.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.