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Amid easing of tensions in the U.S.-China trade dispute, China is slashing its import tariffs on cars and car parts from July 1 in what could be a boon to auto manufacturers without local production such as electric vehicle maker Tesla.
China will cut import duties on most passenger vehicles to 15 percent from 25 percent effective July 1, in a bid to open up China’s market, boosting competition and bolstering the local car sector, the Chinese Finance Ministry said in a statement on Tuesday, as carried by Reuters.
Import tariffs on car parts will be reduced to 6 percent from around 10 percent currently, according to the finance ministry.
Analysts see the Chinese car import duty cuts as a sales boost for Tesla and for German luxury brands such as BMW, Porsche, and Daimler’s Mercedes-Benz.
While many mass-market brands have production in China in joint ventures with local partners, the German luxury carmakers mostly export their automobiles to China, and Tesla also ships U.S.-made EVs to the Chinese market. Without local production, Tesla has been facing stiffer competition in pricing from China’s domestic EV manufacturers.
A couple of months ago, when the U.S. and China appeared to be on the brink of a trade war, Elon Musk took to Twitter to complain to U.S. President Donald Trump about the unfair trade rules on U.S. car sales in China, which make Tesla’s cars much more expensive in the world’s fastest-growing EV market.
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“To be clear, I think a fair outcome for all is quite likely. China has already shown a willingness to open their markets and I believe they will do the right thing,” Musk said back then.
In addition to lower Chinese import tariffs, Tesla could be a big winner of the Chinese plan to remove a limit on foreign ownership of carmaking joint ventures. China—which has been limiting foreign carmakers to owning no more than 50 percent of any local joint venture—plans to lift the foreign ownership cap for EVs and plug-in hybrid car manufacturers as early as this year.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.