Tesla blames misprinted label for China customs issue

Tesla Inc stated on Tuesday that China’s customs officials have accepted the electric automaker’s plan to sort out issues with the clearance of its Model 3 sedans that centered around misprinting of labels.

“We have already reached a resolution with Chinese customs, and we are working closely with them to resume clearance procedures on these vehicles,” a Tesla spokesperson stated.

“Sales of Model 3 in the country are not impacted, and we keep delivering Model 3 vehicles that have already been processed.”

Making inroads into China, the world’s largest electric auto market, is important for the Tesla as it seeks to offset decreasing demand in the United States and convince investors of its ability to become consistently profitable.

“Selling into China has clear hurdles and this is a reminder of the pitfalls when betting on growth in the region,” stated Wedbush Securities analyst Daniel Ives.

Musk has played up the support the automaker is getting from Chinese officials as the company invests in the nation’s first wholly foreign-owned car plant in Shanghai, due to come online later in 2019.

Until then, Tesla has to import U.S.-made vehicles with substantial customs duties, putting it at a disadvantage against locally constructed, government-subsidized electric vehicles from competitors such as Nio Inc, Byton and XPeng Motors.

Financial publication Caixin had first discussed about China’s customs officials blocking the cars.

A total of 1,171 Model 3 sedans arrived at north China’s Tianjin Port, after 84 such cars were imported through the port in February, China’s state news agency Xinhua reported on Tuesday.

The first shipment of Model 3 cars arrived in Shanghai on February 22, and deliveries started at the end of the month, as per the media reports.

Tesla’s Shanghai factory, made possible by raising funds from regional banks at low interest rates, prepares to start making Model 3s at the end of this year and eventually produce vehicles at a rate of 10,000 per week.

Tesla has slashed costs in China several times in the last few months to consturct its cars “more affordable” and revive sales hit by Sino-U.S. trade tensions.

To clash costs and support its drive to earn profit, Tesla last week launched a $35,000 version of its Model 3 sedan and stated its worldwide sales would now be online-only.