China releases Tesla from sales tax

The Chinese government has added Tesla’s electric cars to the list of vehicles exempt from sales tax. Only cars produced in China are exempt from the ten per cent sales tax.

With the construction of the plant in Shanghai, Tesla is apparently also granted this privilege – despite the ongoing trade disputes between the USA and China. According to a statement by the Chinese Ministry of Industry and Information Technology, the tax exemption applies not only to the Model 3 produced in China but to all electric cars sold by Tesla in China, including the Model S and Model X imported from the USA. The reasons for the decision were not stipulated in the announcement, but Tesla’s Shanghai plant and the associated investment are considered good arguments.

According to Tesla, the huge electric vehicle market in China is one of the largest growth markets. As a reaction to the tax exemption, the Californian company announced in a WeChat beta that the purchase price could drop by up to 99,000 yuan (equivalent to 12,564 euros).

Tesla has not yet put this into action because it seems prices are heading in the opposite direction for the time being. Recently, the Californian carmaker raised prices in China in response to currency fluctuations. According to Bloomberg, Tesla prices in China are rising by around two per cent.

In December, a further price increase could be imminent, but not only for Tesla. In August just passed, the Chinese Ministry of Commerce announced that customs duties on vehicles will again be raised to 25 per cent and those on car parts to five per cent. At Tesla, the imported Model S and Model X would be affected by this regulation – and at least initially also the Model 3 from Gigafactory 3, since the supply chain there is to be switched over to local partners only gradually.

reuters.com, bloomberg.com, cnbc.com, miit.gov.cn (Chinese)