Tesla Inc has cut up to $14,000 off its Model X in China following the announcement from Beijing concerning major tariff cuts for imported automobiles, a possible sales boost for the U.S. firm as the world’s largest auto market turn towards electric vehicles.
The automaker will reduce cost of its Model S and Model X cars by more than 6 percent, a Beijing-based sales representative informed Reuters on Wednesday.
China stated on Tuesday it will slash import tariffs for automobiles to 15 percent from 25 percent, a fillip for premium vehicle brands like Tesla and BMW which import a huge number of vehicles.
Tesla stated on Tuesday that any of its vehicles sold in China would be subject to adjusted costs, even before the tariff change comes into effect on July 1.
The price of a top-of-the range Model X will be slashed to 1.3 million yuan ($203,830) but that remains well over the $140,000 cash price-tag before savings for the costliest version in the United States – Tesla’s Model X P100D.
The move by the California-based electric automaker likely foreshadows wider cost cuts for imported cars in China as foreign firms look to narrow a cost gap with domestic competitors. Imports, however, only make up a fragment of the whole market and tend to be upper-end models.
Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, stated price cuts by foreign premium brands will probably force them to adjust the price tag for automobiles they produce regionally in China. This in turn will gradually impact the cost of more affordable, mainstream cars – even regional Chinese brands.
“With imminent price adjustments in the higher-end segment, that will over time lead to a pricing adjustment for the whole market,” Zhang stated.
Other automakers, including Japan’s Toyota Motor and BMW, stated after the tariff cut that they would observe adjusting their retail prices in China to provide competitive offers to clients.