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Trade War Adds $20,000 To Tesla's New Cars

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Tesla has raised the retail prices of the vehicles it sells by more than the equivalent of US$20,000 in China, due to the latest tit-for-tat trade tariff spat between the United States and China, industry news source Electrek reported on Monday.

Tesla, which doesn’t have local manufacturing and imports all the vehicles it sells in China from the U.S., raised over the weekend the prices of its Model S and Model X on the Chinese market by between US$22,700 and US$38,000 (150,000 yuan to 250,000 yuan), depending on the version, Electrek reports.

“The price rises over the weekend reflect the tariff rises only,” a salesperson for Tesla in China told the Financial Times, commenting on the price increase.

“We do not know when prices will change. Our prices will follow the relevant government policies.”

Last week, U.S. President Donald Trump imposed tariffs on US$34 billion worth of annual imports from China, to which the Chinese slapped tariffs on their own US$34 billion list of goods, including soybeans, pork, and electric vehicles (EVs).

Tesla, without a local manufacturing site in China, is now again turning into one of the biggest losers in the trade war.

Two months ago, some Chinese market-rule changes were causing Tesla to benefit from China’s removal of a limit on foreign ownership of carmaking joint ventures that has been in place since 1994. In April, China—which has been limiting foreign carmakers to owning no more than 50 percent of any local joint venture—said that it would lift the foreign ownership cap for EVs and plug-in hybrid car manufacturers as early as this year. Related: Which States Will Lose In The Trade War?

Then in May, amid signs of de-escalation of the trade war, China said that it would slash import tariffs on cars and car parts from July 1 in what could have been a boon to auto manufacturers without local production such as Tesla.

Now the trade war is again on the table and the retaliatory tariffs upon tariffs are forcing Tesla to respond to the tariffs with significantly higher prices that could slow down its sales in the world’s biggest EV market.

By Tsvetana Paraskova for Oilprice.com

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