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Tesla cuts prices to ease hit from tariffs
Reuters | 2018/11/23

BEIJING -- Tesla Inc. is cutting the price of the Model X and Model S in China in a shift in strategy that will see it take more of a hit from tariffs linked to a biting trade war between China and the United States.

The electric carmaker said Thursday it will lower prices of the two models by 12-26 percent to make the vehicles more "affordable" in the world's top auto market, where sales of so-called new-energy vehicles are rising fast.

The move comes amid severe trade tensions between China and the United States. China has levied extra tariffs on U.S. imports, including automobiles, in a blow to Tesla, which imports all light vehicles it sells in the market.

"We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China," Tesla said in a statement.

The move marks a shift from July when Tesla was one of the first U.S. carmakers to raise prices in response to tariffs. The company hiked prices then on the Model X and S by about 20 percent.

Tesla warned last month it was facing major problems selling vehicles in China due to new tariffs that would force it to accelerate investment in its first overseas Gigafactory in Shanghai.

The carmaker last month secured a site for the plant, which will help it avoid steep tariffs.

Tesla, which recently launched pre-sales of the Model 3 in China, added in its statement that the car's price would start from 540,000 yuan ($77,928.83) for a dual motor all-wheel drive version, and 595,000 yuan for a performance version.

Before the price hike in July, Tesla had lowered prices in China in May, after Beijing had said it would cut import tariffs for all light vehicles.

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