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Tesla Registered A New Leasing Company in China

2019-01-22 10:02 Tuesday


In order to maintain the lucrative business before its factory in China is ready to operate, Tesla registered a new business leasing company in Shanghai's free trade zone. The registration information has been revealed in China's National Enterprise Information Publicity System. According to the information, the newly registered company has a registered capital of $30 million and can operate in "leasing and consultancy" sector.

 Tesla

Due to the trade war Trump's administration launched against China, Tesla has suffered a few complicated months in China.

Tesla lowered its price by 40,000 yuan to 90,000 yuan depending on the model in China in May, and the automaker was doing it in preparation for a planned reduction of the 25% import duties that Tesla vehicles are subject to in China down to 15%.

But it backfired as the trade war started to escalate and in July, and the new trade-war tariffs left Tesla no choice but increased the price of Model S and Model X by over $20,000 in China. The company became subject to up to 40% in import duties for the vehicles it delivers in the country from California.

Last month, Tesla again reduced the prices of its vehicles in China by 12 to 26% since Trump said that China agreed to lower tariffs on US cars. This weekend, Tesla has also adjusted the price of Model 3 in China to now start at 499,000 yuan (~$72,000).

While they are not permanently lowering the tariffs, China confirmed that they will "suspend the additional tariffs on US vehicles and auto parts for three months starting January 1, 2019." It means that the tariffs should, at least temporarily, go back down to 25% for the first quarter 2019.

Although there seems to be a cease-fire, Tesla still finds itself at a cost disadvantage with other companies in the market. Now Tesla is trying to maintain demand until local manufacturing factory fixes the cost disadvantage.

When first announcing the plant, Tesla said that it expects "construction to begin in the near future" and that it "will take roughly two years" until they start producing vehicles and "then another two to three years before the factory is fully ramped up to produce around 500,000 vehicles per year for Chinese customers."

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