Tesla Stops Taking China Orders For US-Made Vehicles

Tesla has stopped accepting orders for US-manufactured Model S and Model X vehicles for import to Chinese customers, and is instead persuading customers to look at locally made Model Y and Model 3 vehicles, amidst chaotic trade conditions between the two countries, according to local media reports.

Sales managers in China are asking customers to consider the vehicles manufactured at Tesla’s factory outside of Shanghai, Hong Kong-based newspaper The South China Morning Post reported.

Customers in China reported being unable to place orders for the Model S and Model X, and the vehicles were no longer available on Tesla’s WeChat app.

Tariffs

While Tesla did not give a reason for the change, it follows multiple rounds of increasing tariffs levied by the US and China against one another in recent days.

China, the world’s largest car market and largest market for EVs, is in the midst of a brutal price war in which hundreds of EV manufacturers are cutting prices to compete for customers.

Competition from rivals such as BYD, Xpeng, Xiaomi and Zeekr had weighed on Tesla’s sales in the country and additional import duties make the US-made vehicles uncompetitive.

Model S, Model X and Cybertruck vehicles were already subject to a 25 percent import duty in mainland China before the recent supplementary duties.

China imported 1,553 Model X cars and 311 Model S vehicles last year, according to figures from analyst Li Yanwei with the China Auto Dealers Association cited by Reuters.

The models accounted for less than 0.5 percent of Tesla’s 657,000 deliveries in China last year.

Falling sales

Tesla was the first company to fully own a car factory in mainland China when it began constructing the Shanghai plant in 2018. Previously companies had to form joint ventures for production, holding no more than 50 percent of the venture.

The company has since held the top spot in China’s premium EV market, but its first-quarter sales in mainland China fell 22 percent year-on-year to 172,754 units, their lowest level in three years, according to China Passenger Car Association data.

The drop was part of a broader sales decline around the world for Tesla amidst stiff competition, a lack of updates to vehicles and a backlash against the political engagements of chief executive Elon Musk.