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Tesla Cuts Prices As China Suspends Auto Tariffs

Tesla

Tesla has reduced the prices of its Model X and Model S vehicles sold in China, after the Chinese authorities suspended additional tariffs on U.S.-manufactured cars for three months starting January 1.

Tesla has cut the price of certain Model S cars in China by up to US$15,230 (105,000 yuan), while prices for some Model X vehicles have been reduced by up to US$9,430 (65,000 yuan), Reuters reports, quoting Tesla’s Chinese website.

The price cuts could help lift the sales of the U.S. electric vehicle maker in China, which were said to have plummeted in recent months over the tariff uncertainty and frequent price changes, due to the U.S.-China trade war.

As Washington and Beijing are trying to negotiate a trade deal amid a three-month trade truce, China confirmed on Friday that it would suspend for three months as of January 1 the planned 25-percent tariffs on 144 vehicles and auto parts made in the United States and 5-percent tariffs on another 67 car items.

Tesla, which doesn’t have local Chinese production yet, was among the first U.S. automakers to raise prices in China, due to the heated trade tariff war in the summer. As a result, reports have had it that Tesla’s sales in China plummeted by 70 percent in October in the latest demonstration of the adverse impact the U.S.-Chinese trade war is having on business.

China is a key market for Tesla where it plans to build a gigafactory, and in October it only sold 211 cars there, according to data from the China Passenger Car Association reported by Reuters.

In an email to Barron’s, a Tesla spokesman disputed the report of the 70-percent sales plunge, saying that the numbers obtained from an official at the association are “wildly inaccurate” and “off by a significant margin.”

Freeman Shen, chief executive at China’s electric vehicle maker WM Motor, said reports that Tesla’s vehicle sales in China plunged by 70 percent is “misleading information” because of the opaque and not always accurate sales numbers coming out of China. Shen told CNBC that Chinese car sales numbers are always “kind of a mystery” because data is collected through several channels.

But another China-based auto industry expert, Jacob George, vice president, and general manager of the Chinese branch of U.S. marketing intelligence company J.D. Power, said last week that the third-party data about Tesla’s plunging sales was accurate, as sales had suffered from frequent price changes in the latter half of this year.

By Tsvetana Paraskova for Oilprice.com

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