Tesla cuts prices in China to ease tariff hit

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A Tesla showroom in Beijing in July. Photo credit: BLOOMBERG

BEIJING – Tesla Inc. cuts the price of the Model X and Model S in China by a shift in strategy, which will be more affected by the tariffs related to a caustic trade war between China and the United States.

The electric car manufacturer said Thursday that it will lower the prices of the two models by 12-26 percent to make the vehicles "more affordable" in the world's top car market, where sales of so-called new energy vehicles are increasing rapidly.

The move comes in the midst of serious trade strains between China and the United States. China has levied additional tariffs on US import products, including cars, in one fell swoop for Tesla, which imports all light vehicles that it sells on the market.

"We are absorbing a significant portion of the rate to make our cars more affordable for customers in China," Tesla said in a statement.

The move marks a shift from July when Tesla was one of the first US car manufacturers to raise prices following tariffs. The company then increased the prices on the X and S model by about 20 percent.

Tesla warned last month that it had to deal with major problems with the sale of vehicles in China due to new tariffs that would force it to accelerate investments in the first overseas gigafactory in Shanghai.

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The car manufacturer has secured a site for the plant last month, which means it can avoid steep tariffs.

Tesla, which recently launched the pre-sales of the Model 3 in China, added that the price of the car would start at 540,000 yuan ($ 77,928.83) for a two-engine version with four-wheel drive and 595,000 yuan for a performance version .

Before the price rise in July, Tesla lowered prices in China in May after Beijing had said it would cut import tariffs for all light vehicles.