Tesla Will Raise Prices in China if Trump's Trade War Continues: Report
The new pricing could take effect as early as this Friday.
American electric automaker Tesla will raise prices in response to ongoing trade tensions between the United States and China. According to a report from Reuters citing individuals familiar with the matter, Tesla is set to increase pricing across its vehicle lineup as early as this Friday.
While the August 30th adjustment is said to be related to the Yuan's weakening value compared to the U.S. dollar, the same sources report that Tesla has begun preparing for a second round of pricing adjustments in December should an expected tariff increase on American-manufactured cars be imposed in the People's Republic.
The Chinese State Council announced last Friday that it would begin imposing increased tariffs on more than $75 billion of U.S.-sourced goods in two batches; the first of which is effective Sept. 1 and the second on Dec. 15. During the second round, American made automobiles will be stricken with a 25 percent tariff while auto parts and components will receive a meager 5 percent duty fee.
If applied as allegedly planned, Tesla's pricing increase wouldn't be the first time that an automaker has adjusted its sticker price to combat tariff-induced cost increases. However, it may be one of the last times that Tesla needs to make such an adjustment due to an increase in governmental-imposed duty fees.
Despite a rocky start with the sale of its affordable Model 3 sedan in China, Tesla's overall relationship with the country's government has been surprisingly amicable. In fact, the California-based automaker has made strides by becoming the very first wholly owned foreign automaker to build an assembly plant that operates on Chinese soil without a China-based business partner.
Tesla began construction of its third Gigafactory assembly plant earlier this year, choosing Shanghai as the location for its $2-billion facility. According to CEO Elon Musk, vehicle production is slated to begin by the end of 2019. According to one of the individuals who spoke with Reuters on the matter, Tesla will reportedly attempt to ship more of its vehicles to China before December to avoid paying a premium should the tariff war continue to escalate.
Tesla did not respond to The Drive's request for comment at the time of writing.