Tesla hikes prices in China in first response to trade war


2014 Tesla Model S in China

2014 Tesla Model S in China

In a move largely seen as the first response to a trade war that has broken out between China and the United States, Tesla has hiked prices of its Model S and Model X luxury cars in China.

According to a report in the Nikkei Asian Review, Tesla raised the price of the Model S from about $107,000 to $127,000.

On June 30, the Trump Administration announced investment restrictions on Chinese companies, along with 25-percent tariffs on airplane tires, airplane and marine engines, nuclear reactors and parts, industrial dishwashers, boilers, and dryers, among a host of other products.

China retaliated by imposing tariffs on pork, soy beans, and electric cars.

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Teslas are the only American electric cars currently sold in China.

China is the largest market for electric cars, and one of Tesla's primary markets. China accounted for about 15 percent of Tesla sales even before the Model 3 went on sale there, according to Nikkei.

Earlier this year, Tesla announced plans to build a factory in Shanghai after China lifted restrictions on foreign ownership of factories. American businesses had complained that compulsory partnerships with Chinese automakers led to theft of intellectual property.

CHECK OUT: Tesla to build electric-car factory in Chinese free-trade zone: report

Tesla has struggled to become profitable, and the company chose not to absorb the 25-percent tariff on its cars.

It is unclear how the price increase may affect sales of Teslas in China.

The move could discourage other American automakers such as General Motors from exporting other electric cars, such as the Chevy Bolt EV, to China.

GM has a large manufacturing presence in China through its partner SAIC (formerly Shanghai Automotive Industry Corporation), but it doesn't sell the Bolt EV in China.

Tesla has been quick to adjust prices to tariff announcements. It recently announced it would cut Model S pricing in China by 6 percent after the country said it would reduce tariffs in May. Those price cuts had been slated to take effect July 1, according to Bloomberg.

 
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