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Tesla Model 3 Imports Halted After China Suspends Customs Clearance: Report

China has reportedly found unlabeled and mislabeled components on Tesla Model 3s imported into the country.

Tesla’s first full shipment of Model 3 electric sedans is being held at port in China. Recent reports by Chinese media outlets and Reuters suggest that Tesla’s customs clearance has been suspended due to non-compliance with local regulatory requirements.

Reportedly, the General Administration of Customs (GAC) found that Tesla had failed to affix Chinese labels to brake fluid tanks in the Model 3. The GAC also reportedly states that some vehicles were found to have mislabeled “real motor capacity.” Media outlet Caxin reports that Tesla cites a misconfiguration of its printers is to blame for the non-compliance.

Inspectors have reportedly been asked to “step up inspections” of other Tesla models and block clearances if similar problems are found to exist. In the interim, reports notes that Tesla has been instructed not to sell or use any Model 3s which have already been cleared by customs.

A source later told Reuters that Tesla has agreed to a remedy for the identified problems.

“This error resulted from misprinted labels on certain Model 3 vehicles.” a Tesla spokesperson told The Drive in an email, “We have already reached a resolution with Chinese customs, and we are working closely with them to resume clearance procedures on these vehicles. Sales of Model 3 in the country are not impacted, and we continue to deliver Model 3 vehicles that have already been processed.”

Presently, all Model 3s purchased around the world are manufactured at Tesla’s assembly plant in Fremont, California and exported around the world to markets which Tesla serves. Tesla struck a deal with the Chinese government to become the first independent foreign-owned automaker in the People’s Republic, allowing it to build Gigafactory Shanghai and manufacturer cars on Chinese soil without a Chinese-owned partner to oversee operations.

Tesla does not expect to begin production at its China facility until late 2019, meaning that it will import all of its vehicles into China until the assembly line is operational. CEO Elon Musk says that the automaker is loading up China with its Model 3s as fast as it possibly can while the window for low-tariff trade is still open.

A Model 3 in China starts at around $72,000 (499,000 Yuan).

“We get [the Model 3s] to China as fast as possible,” said Musk on a quarterly earnings call in January. He later continued, “We don’t what’s going to happen with the trade negotiations. So that’s very important to get those cars especially to China as soon as possible. We hope the trade negotiations go well, but it’s not clear. But we need to get them there while there’s sort of a de facto […] truce on the tariff war. And the demand gen is really not one of the things we’re thinking about.”

Updated to reflect statement from Tesla on the matter.